Trade Credit, the Financial Crisis, and SME Access to Finance

43 Pages Posted: 8 Aug 2013

See all articles by Santiago Carbo-Valverde

Santiago Carbo-Valverde

Bangor Business School; Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF)

Francisco Rodriguez-Fernandez

University of Granada - Department of Economic Theory and History

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance

Date Written: August 7, 2013

Abstract

Mounting evidence indicates that firms, particularly SMEs, suffered from a significant credit crunch during this crisis. Little research exists on how SMEs coped with this problem due to a lack of data in the U.S. and elsewhere. We analyse for the first time whether trade credit provided an alternative source of external finance to SMEs during the crisis. Using firm-level Spanish data we find that credit constrained SMEs depend on trade credit, but not bank loans, and that the intensity of this dependence increased during the financial crisis. Unconstrained firms, in contrast, are dependent on bank loans not trade credit.

Keywords: SMEs, financing constraints, bank lending, trade credit, predictability

JEL Classification: G21, D21, L26

Suggested Citation

Carbo-Valverde, Santiago and Rodriguez-Fernandez, Francisco and Udell, Gregory F., Trade Credit, the Financial Crisis, and SME Access to Finance (August 7, 2013). 26th Australasian Finance and Banking Conference 2013. Available at SSRN: https://ssrn.com/abstract=2307246 or http://dx.doi.org/10.2139/ssrn.2307246

Santiago Carbo-Valverde (Contact Author)

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom

Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF) ( email )

Serrano Anguita 9
Madrid, Madrid 28004
Spain

Francisco Rodriguez-Fernandez

University of Granada - Department of Economic Theory and History ( email )

Granada
Spain

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

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