Barter Credit: Warehouses as a Contracting Technology
60 Pages Posted: 5 May 2020
Date Written: April 2, 2020
A large Brazilian agribusiness lender introduces a new contracting technology: grain warehouses. Using runner-up warehouse locations as a control group, I find that lenders' access to these warehouses permits a new debt contract, i.e. a barter credit repayable in grain, increases borrowers' debt capacity and lowers borrowing costs. The effects are stronger when price insurance is important, for municipalities with weaker courts, and for financially-constrained borrowers. Overall, evidence suggests that creditors alter their organizational design to mitigate credit market imperfections.
Keywords: Organizational Design, Warehouses, Output Storage, Barter Credit, Price Insurance, Credit Enforcement
JEL Classification: D23, G32, G33, L22, L25
Suggested Citation: Suggested Citation