CFCM 16/04: Customer financing, bargaining power and trade credit uptake

Abstract

We employ a panel quantile regression technique to investigate different theories explaining trade credit taken by firms. Consistent with the financing theory, our results suggest that the substitution between trade credit and bank loans increases at higher quantiles and it is stronger for larger firms with better access to external finance. Firms with a high market share operating in less concentrated industries have higher account payables to assets ratios, supporting the customer bargaining power theory.

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Authors

Simona Mateut and Thanaset Chevapatrakul

 

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