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Does Trade Credit Say Anything about banking Credit?

Pablo Cotler

Working Papers from Universidad Iberoamericana, Department of Economics

Abstract: Bank penetration in Mexico is one of the lowest in Latin America. Further, quarterly surveys carried-out by the Central Bank show that trade credit is used by a percentage of firms that is twice those that use credit from banks. Notwithstanding such result, there is no empirical work that may help understand what type of firms demand and use trade credit. Using data provided by a recent national survey, we find that the most likely firms to use trade credit are big, formal and with access to banking credit. While our results can not reject the likelihood that credit rationing may be present in the market for trade credit, the use of such financing may not necessarily be considered an indicator of whether some firms may have no access to banking credit.

Date: 2013
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