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Trade Credit Versus Bank Credit: Which is More Stable in a Recession?

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dc.contributor.advisor Mudd, Shannon
dc.contributor.author Born, Henrik
dc.date.accessioned 2013-06-18T15:36:42Z
dc.date.available 2013-06-18T15:36:42Z
dc.date.issued 2013
dc.identifier.uri http://hdl.handle.net/10066/11037
dc.description.abstract Small and large firms alike rely on their suppliers not just for material inputs, but also for lines of credit. This form of financing – called trade credit – has been studied as an alternative source of financing to loans from financial intermediaries (i.e. banks). In this paper, I derive a theoretical framework from existing literature that forms the basis for predicting how the allocation of trade credit and bank loans change in a recession. I conduct statistical analysis using World Bank Development Indicators and the Enterprise Survey, examining firm-level data on Eastern Europe and Central Asia. Ultimately, I find strong evidence that the relationship between economic growth and the use of trade credit is nonlinear. The results of the analysis also suggest that suppliers provide a more stable source of funding than financial intermediaries do.
dc.description.sponsorship Haverford College. Department of Economics
dc.language.iso eng
dc.rights.uri http://creativecommons.org/licenses/by-nc/3.0/us/
dc.subject.lcsh Lines of credit
dc.subject.lcsh Bank loans
dc.title Trade Credit Versus Bank Credit: Which is More Stable in a Recession?
dc.type Thesis
dc.rights.access Haverford users only


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