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Bank loan availability and trade credit for small businesses during the financial crisis

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  • Tsuruta, Daisuke

Abstract

Using small business data, we investigate the relationship between bank loan availability and trade credit in Japan during the recent global financial crisis. Previous studies argue that the relationship between trade payables and bank loan availability is negative because trade credit is an inferior financial resource for firms. In addition, firms with better credit availability offer more trade credit to their customers. Specifying the credit guarantee program for small businesses introduced in Japan after October 2008 as an exogenous shock that enhanced credit availability, we find that small businesses increase trade credit (both payables and receivables) if bank loan availability improves. This implies that the relationship between trade payables and bank loans for small businesses is complementary. Furthermore, small businesses with enhanced credit availability offer more trade credit to their customers.

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  • Tsuruta, Daisuke, 2015. "Bank loan availability and trade credit for small businesses during the financial crisis," The Quarterly Review of Economics and Finance, Elsevier, vol. 55(C), pages 40-52.
    • Handle: RePEc:eee:quaeco:v:55:y:2015:i:c:p:40-52
    DOI: 10.1016/j.qref.2014.09.004
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    6. Asif Saeed & Qasim Zureigat, 2020. "Corporate Social Responsibility, Trade Credit and Financial Crisis," JRFM, MDPI, vol. 13(7), pages 1-23, July.
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    More about this item

    Keywords

    Trade credit; Bank credit; Financial crisis; Small business;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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