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The Determinants of Trade Credit During and After the 2008 International Financial Crisis

Author

Listed:
  • Carlos Carreira

    (Univ Coimbra, CeBER, Faculty of Economics)

  • Pedro Silva

    (Univ Coimbra, CeBER, Faculty of Economics)

Abstract

This work analyses the determinants of trade credit granted and received and the effect of the 2008 financial crisis on it. Using a sample of 96,417 Portuguese SMEs from the non-financial sector for the period 2010–2019, we found that trade credit plays an important role in firms' financing policies. Firms with better access to the credit market act as financial intermediaries and grant financing to firms that have difficulty accessing credit. Moreover, the use of trade credit seems to be a substitute for bank financing. We also found that firms use trade credit as a marketing tool to increase their sales. Finally, we found a slump in credit granted to customers after the 2008 financial crisis, which seems to mimic the contraction in aggregate bank credit.

Suggested Citation

  • Carlos Carreira & Pedro Silva, 2023. "The Determinants of Trade Credit During and After the 2008 International Financial Crisis," Notas Económicas, Faculty of Economics, University of Coimbra, issue 56, pages 90-110, July.
    • Handle: RePEc:gmf:journl:y:2023:i:56:p:90:110
    DOI: 0.14195/2183-203X_56_4
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    References listed on IDEAS

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    More about this item

    Keywords

    Trade Credit; SMEs; Financing; Commercial policy.;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • G01 - Financial Economics - - General - - - Financial Crises

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