Article ID Journal Published Year Pages File Type
5100658 Journal of Financial Intermediation 2017 21 Pages PDF
Abstract
We examine how access to bank credit affects trade credit in the supplier-customer relationships of U.S. public firms. For identification, we use exogenous liquidity shocks to supplier firms in the form of staggered changes to interstate bank branching laws. Using a variety of tests, we show that supplier firms with greater access to banking liquidity offer more trade credit to their customers. We also show that when bank branching restrictions are relaxed in the supplier's state, the supplier-customer relationship is more likely to survive.
Related Topics
Social Sciences and Humanities Business, Management and Accounting Strategy and Management
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