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Cited by 622

The DOI matches its Crossref record; 35 of the 35 references it cites were found in a registry or an index.

Trade Credit and the Bank Lending Channel

Open access
Nilsen, Jeffrey H.·2002·Journal of Money, Credit, and Banking
DOI 10.1353/mcb.2002.0032
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Abstract

The bank lending channel theory posits that during monetary contractions banks restrict some firms' loans, thus reducing their desired investment independently of interest rates.Previous research finds small firms reduce, while large firms accelerate, loan growth.We find that small firms increase trade credit, a substitute credit, indicating a strong loan demand.It supports the bank lending channel: they do not voluntarily cut bank loans since they increase a less-desirable alternative.Using trade credit is propitious since unlike commercial paper (investigated by previous researchers), it is widely used by the small firms suffering the loan decline.Surprisingly, we also find large firms increase trade credit, a puzzle since they are typically assumed to have wide access to other credit.Using individual firm data, we find the reasons large firms use trade credit are financial in nature: those without a bond rating increase trade credit (i.e.without access to open market credit).As relatively few firms have this mark of quality, it implies that more firms are affected by credit constraints than previously believed.

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Metadata

Authors
Nilsen, J. H.
Venue
Journal of Money, Credit, and Banking
Publisher
Project MUSE
Published
2002
Volume
34
Issue
1
Pages
226-253
ISSN
  • 0022-2879 (ISSN-L)
  • 1538-4616
DOI
10.1353/mcb.2002.0032
OpenAlex
W3122858800
Cited by
622
References
35
FWCI
44.33
Type
journal article
Language
en
Open access
bronze

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