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Trade Credit, Bank Credit and Crisis: Some Empirical Evidence for India?

Author

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  • Saibal Ghosh

    (The author is with the Department of Economic and Policy Research, Reserve Bank of India, Mumbai, email: saibalghosh@rbi.org.in)

Abstract

Employing data on an extended sample of manufacturing firms during 1993–2012, the article studies the inter-linkage between trade credit and bank credit and how it evolved during the crisis. Accordingly, we first discuss the relevance of a trade-credit channel in India and subsequently, explore the interplay between these two financing forms. The analysis provides some evidence in favour of a trade-credit channel in India. More importantly, the findings indicate that bank credit and trade credit are complementary, although there was a differential impact on accounts payable (demand) and accounts receivables (supply) during the crisis. JEL Classification: G21, G32, P52

Suggested Citation

  • Saibal Ghosh, 2015. "Trade Credit, Bank Credit and Crisis: Some Empirical Evidence for India?," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 9(4), pages 333-361, November.
    • Handle: RePEc:sae:mareco:v:9:y:2015:i:4:p:333-361
    DOI: 10.1177/0973801015596854
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    More about this item

    Keywords

    Trade Credit; Bank Credit; Crisis; Monetary Policy; India;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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