When Trade Credit Facilitates Access to Bank Finance: Evidence from Us Small Business Data

31 Pages Posted: 4 Dec 2003

See all articles by Eric Severin

Eric Severin

University of Lille I - Institute of Business Administration

Pascal Alphonse

University of Lille 2 - ESA

Jacqueline Ducret

University of Valenciennes - Institut d'Administration des Entreprises

Date Written: January 2004

Abstract

While trade credit is traditionally considered as a substitute for bank loans, recent theoretical papers (e.g. Biais and Gollier (1997)) suggest that bank debt and trade credit can also be considered as two complementary sources of financing. By using US small businesses data (NSSBF 1998), this paper provides an empirical analysis of these hypotheses. The empirical findings are consistent with the hypothesis that trade credit helps firms to improve their reputation. The results show that trade credit can work as a signal about firm's quality and thus facilitates access to bank debt.

Keywords: Bank, Trade credit, Informational asymetry

Keywords: bank Debt, Small Business Finance, Trade Credit

JEL Classification: G32

Suggested Citation

Severin, Eric and Alphonse, Pascal and Ducret, Jacqueline, When Trade Credit Facilitates Access to Bank Finance: Evidence from Us Small Business Data (January 2004). Available at SSRN: https://ssrn.com/abstract=462660 or http://dx.doi.org/10.2139/ssrn.462660

Eric Severin

University of Lille I - Institute of Business Administration ( email )

France

Pascal Alphonse

University of Lille 2 - ESA ( email )

1 Place Deliot
BP 31
59020 Lille Cedex
France

Jacqueline Ducret (Contact Author)

University of Valenciennes - Institut d'Administration des Entreprises ( email )

Rue des cent tetes
Les Tertiales
F-59313 Valenciennes cedex 9
France
33 3 27 51 76 54 (Phone)
33 3 27 51 76 19 (Fax)

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