European trade credit use and SME survival

European trade credit use and SME survival We examine if trade credit helped financially constrained SMEs survive the recent financial crisis. Using data for 202,696 SMEs across 13 European countries over the period 2003–2012, we show that trade credit had a large positive impact on firm survival, such that a one standard deviation increase in trade credit results in a 21% decrease in the likelihood of distress. We also report evidence of a significant redistribution effect, with cash rich or unconstrained SMEs extending significantly more net trade credit than their less financially resourced counterparts. The results are robust to several econometric concerns. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Corporate Finance Elsevier

European trade credit use and SME survival

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Publisher
Elsevier
Copyright
Copyright © 2017 Elsevier Ltd
ISSN
0929-1199
D.O.I.
10.1016/j.jcorpfin.2017.12.005
Publisher site
See Article on Publisher Site

Abstract

We examine if trade credit helped financially constrained SMEs survive the recent financial crisis. Using data for 202,696 SMEs across 13 European countries over the period 2003–2012, we show that trade credit had a large positive impact on firm survival, such that a one standard deviation increase in trade credit results in a 21% decrease in the likelihood of distress. We also report evidence of a significant redistribution effect, with cash rich or unconstrained SMEs extending significantly more net trade credit than their less financially resourced counterparts. The results are robust to several econometric concerns.

Journal

Journal of Corporate FinanceElsevier

Published: Apr 1, 2018

References

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