Centre for Finance, Credit and Macroeconomics (CFCM)

CFCM 17/04: Customer financing, bargaining power and trade credit uptake


We investigate the impact of well-established trade credit theories on different parts of the distribution of trade credit taken by firms. Our results suggest that the trade credit - bank loans substitution increases at the higher trade credit quantiles and is stronger for larger firms (financing theory). Firms with high market shares operating in less concentrated industries have higher account payables to assets ratios (bargaining power theory). While the customer bargaining power motive strengthens up to the 70th quantile and prevails in industries independent on external finance, financing reasons play the main role especially at the higher trade credit quantiles.

This is a revised version of paper 16/04.

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Simona Mateut and Thanaset Chevapatrakul


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Posted on Thursday 13th July 2017

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