Trade credit, the Financial Crisis and Firms Access to Finance

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We analyse for the first time whether trade credit provided an alternative source of external finance to SMEs during the credit crisis. Using firm level panel data on over 40,000 Spanish SMEs we find that credit constrained SMEs depend on trade credit, but not bank loans, to finance capital expenditures and that the intensity of this dependence increased during the financial crisis. Unconstrained firms, in contrast, are dependent on banks loans not trade credit. Overall, this suggests substitution between bank loans and trade credit that is conditional on the level of financing constraints and is more intense during the crisis
Original languageEnglish
Pages (from-to)113-143
JournalJournal of Money, Credit and Banking
Issue number1
Early online date19 Jan 2016
Publication statusPublished - 19 Jan 2016

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