Download this Paper Open PDF in Browser

Inter-Firm Trade Finance in Times of Crisis

25 Pages Posted: 5 Nov 2009  

Anna Maria C. Menichini

Università degli Studi di Salerno; University of Naples Federico II - CSEF - Center for Studies in Economics and Finance

Date Written: November 4, 2009

Abstract

The paper discusses the main features that distinguish inter-firm international trade finance from alternative sources of financing. On the one hand, inter-firm trade finance could help overcome informational problems associated with other lending relationships; on the other, it may contribute to propagate shocks due to the interconnection among firms along credit chains. The paper evaluates the potential effects of a financial crisis on the use of trade credit for firms operating in developing countries. It argues that while the advantages of trade credit might remain largely unexploited due to poor legal institutions, the disadvantages might be exacerbated because of these firms’ greater exposure to a default chain. Based on these arguments, a menu of choices is identified for what policymakers can do to boost firms’ access to inter-firm trade finance in times of crisis.

Keywords: trade finance, financial crisis

JEL Classification: G01, G32, G33, K22

Suggested Citation

Menichini, Anna Maria C., Inter-Firm Trade Finance in Times of Crisis (November 4, 2009). World Bank Policy Research Working Paper, No. 5112. Available at SSRN: https://ssrn.com/abstract=1499580 or http://dx.doi.org/10.2139/ssrn.1499580

Anna Maria C. Menichini (Contact Author)

Università degli Studi di Salerno ( email )

via Giovanni Paolo II
Fisciano, Salerno 84084
Italy
+39 089 962174 (Phone)
+39 089 962049 (Fax)

HOME PAGE: http://www3.unisa.it/docenti/menichini/index

University of Naples Federico II - CSEF - Center for Studies in Economics and Finance ( email )

Via Cintia
Complesso Monte S. Angelo
Naples, Naples 80126
Italy

Paper statistics

Downloads
200
Rank
128,330
Abstract Views
858