Citation

Discussion Paper Details

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Title: Inter-Enterprise Credit and Adjustment During Financial Crises: The Role of Firm Size

Author(s): Fabrizio Coricelli and Marco Frigerio

Publication Date: December 2016

Keyword(s): Financial crises, SMEs and trade credit

Programme Area(s): International Macroeconomics and Finance and Monetary Economics and Fluctuations

Abstract: Analyzing a large firm-level database for European countries, the paper shows that during the Great Recession trade credit amplified the liquidity squeeze on SMEs induced by the contraction of bank credit. Because of their generally weaker bargaining power in the inter-enterprise credit market, SMEs sharply increased their net trade credit and thus transferred financial resources to larger firms. The paper finds that the liquidity squeeze induced by trade credit had large negative effects on real activity by SMEs, contributing to the fall in employment, wages and investments.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11680

Bibliographic Reference

Coricelli, F and Frigerio, M. 2016. 'Inter-Enterprise Credit and Adjustment During Financial Crises: The Role of Firm Size'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11680