Does Trade Credit Substitute Bank Credit?: Evidence From Firm-Level Data

The paper examines micro data on Italian manufacturing firms'' inventory behavior to test the Meltzer (1960) hypothesis according to which firms substitute trade credit for bank credit during periods of monetary tightening. It finds that their inventory investment is constrained by the ava...

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Bibliographic Details
Main Author: De Blasio, Guido (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C International Monetary Fund 2003
Series:IMF Working Papers Working Paper no. 03/166
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Summary:The paper examines micro data on Italian manufacturing firms'' inventory behavior to test the Meltzer (1960) hypothesis according to which firms substitute trade credit for bank credit during periods of monetary tightening. It finds that their inventory investment is constrained by the availability of trade credit. As for the magnitude of the substitution effect, however, this study finds that it is not sizable. This is in line with the micro theories of trade credit and the evidence on actual firm practices, according to which credit terms display modest variations over time
Physical Description:1 Online-Ressource (28 p)
ISBN:1451858124
9781451858129

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