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Contribution Details

Type Journal Article
Scope Discipline-based scholarship
Title Trade Credit Use as Firms Approach Default
Organization Unit
Authors
  • Emilia Garcia
  • Judit Montoriol-Garriga
Item Subtype Original Work
Refereed Yes
Status Published electronically before print/final form (Epub ahead of print)
Language
  • English
Journal Title Journal of Money, Credit and Banking
Geographical Reach international
Volume forthcoming
Page Range -
Date 2019
Abstract Text Using a sample of distressed firms with information about suppliers, we document an average fall in the use of trade credit as firms approach bank-ruptcy compared to a control sample of non-bankrupt firms. However, we uncover a large degree of heterogeneity across suppliers. Suppliers facing high switching costs maintain their business ties with the distressed firms as they approach bankruptcy, and provide them more trade credit. Suppliers in concentrated markets provide temporary support to their clients. Overall, the findings of this paper show that switching costs are fundamental to ex-plain whether suppliers provide liquidity to their distressed clients or not.
Related URLs
Digital Object Identifier 10.1111/jmcb.12618
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