Trading Firm Finance: The Relationship between Trade Credit and Loans (Japanese)

Studies of trading firm finance focus on the various credit instruments used by general trading companies and uncover new knowledge about the relationship between trade credit (i.e. inter-company credit) and loans (i.e. credit from financial institutions). Theories concerning trade credit granted by industrial firms and loans by financial institutions are broadly divided into those that focus on the differences between the key players, i.e. businesses and financial institutions, and those that focus on the differences between methods, i.e. trade credit and loans. However, empirical studies such as that conducted by Petersen and Rajan (1997) do not necessarily validate theories based on differences in either credit players or credit methods. This paper used newly-available data to examine how much impact differences in players and methods have on the relationship between trade credit and loans. Even when granted by the same player, trade credit and loans can act in completely different ways, while it is not uncommon for loans or trade credit granted by different players to exhibit the same features. Leading research does not clearly indicate that differences in the nature of credit instruments have a more noticeable impact on the relationship between trade credit and loans than differences in the players do; this is significant when considering players and methods for corporate financing in the future.