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Financial frictions, trade credit, and the 2008–09 global financial crisis

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  • Coulibaly, Brahima
  • Sapriza, Horacio
  • Zlate, Andrei

Abstract

This paper studies the role of the credit crunch in the severe contraction of economic activity during the 2008–09 global financial crisis, using firm-level data from six emerging Asian economies. After controlling for the effect of falling demand, we find that sales declined by less for firms with better pre-crisis financial conditions. Amid the decline in external financing opportunities, some firms relied more on trade credit from suppliers during the crisis, which allowed them to post relatively better sales. Export-intensive firms resorted less to trade credit as an alternative source of finance, which contributed to their larger declines in sales.

Suggested Citation

  • Coulibaly, Brahima & Sapriza, Horacio & Zlate, Andrei, 2013. "Financial frictions, trade credit, and the 2008–09 global financial crisis," International Review of Economics & Finance, Elsevier, vol. 26(C), pages 25-38.
    • Handle: RePEc:eee:reveco:v:26:y:2013:i:c:p:25-38
    DOI: 10.1016/j.iref.2012.08.006
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    More about this item

    Keywords

    Trade credit; 2008–09 financial crisis; Emerging Asia; International trade;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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