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Trade credit use and bank loan access: an agency theory perspective

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  • Liangbo Ma
  • Shiguang Ma

Abstract

In this study we find that firms’ use of trade credit significantly facilitates their access to bank loans in the future, suggesting a complementary relationship. Such a relationship is more profound for firms with higher perceived agency costs, i.e., firms with opaque corporate information, firms located in regions with less developed external institutions, and firms at an early stage of existence. Firms switch from trade credit to bank loans as the main source of debt financing as they age. However, the process is slower for firms with a greater level of corporate information opacity and firms located in regions with weak external institutions.

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  • Liangbo Ma & Shiguang Ma, 2020. "Trade credit use and bank loan access: an agency theory perspective," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(2), pages 1835-1865, June.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:2:p:1835-1865
    DOI: 10.1111/acfi.12517
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