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Firm-bank “Odd Couples” and trade credit: Evidence from Italian SMEs

Jérémie Bertrand () and Pierluigi Murro
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Jérémie Bertrand: IESEG School of Management, Finance Department 3, rue de la digue, 59000 Lille - France

No 2020-ACF-09, Working Papers from IESEG School of Management

Abstract: We analyze the use of trade credit as a substitute for relationship lending credit when firms cannot otherwise obtain such credit. Using a sample of SMEs from the Survey of Italian Manufacturing Firms, we show that when opaque firms seeking relationship credit encounter transactional banks, they use a greater portion of trade credit. This findings suggest that opaque firms substitute their missing relationship credit with trade credit, because trade creditors are more able to evaluate soft information. The results depend on firm characteristics, the nature of the bank, and the size of the firms’ banking pool.

Keywords: Banks; Lending Technologies; Small Business; Trade Credit (search for similar items in EconPapers)
JEL-codes: G21 L14 L22 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2020-10
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-ent and nep-sbm
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