When do trade credit discounts matter? Evidence from Italian firm-level data

Giuseppe Marotta

Heterogeneity and monetary policy from Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica

Abstract: Italian firms are top users of trade credit in an international comparison. The paper offers some clues to the determinants of this stylised fact exploiting the answers of about 1900 manufacturing firms on a wide range of contractual features, separately for domestic and foreign counterparties. The main finding is that, with the almost totality of commercial transactions made on credit, there is no evidence that trade credit is more expensive than loans. An econometric investigation shows that discounts offered have the expected effect of reducing payment delays only for customers located abroad, where customary credit periods are shorter. The result is consistent with the poor explanatory power of the discounts received for the trade debt period of domestic firms and with the evidence of larger buyers willing to exploit their market power with suppliers.

Keywords: Trade credit; Late payments; Credit rationing (search for similar items in EconPapers)
JEL-codes: E52 G32 (search for similar items in EconPapers)
Pages: pages 26
Date: 2003-03
New Economics Papers: this item is included in nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: When do trade credit discounts matter? Evidence from Italian firm-level data (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:mod:modena:0303

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