Discussion paper

DP18468 Supply Chain Finance and Firm Capital Structure

We model the joint financial decisions of a bank, a supplier, and their customers when firms have access to a factoring service to support a trade credit agreement. To explore the nexus between firms’ capital structure and the intensity of their financial and productive interlinkages we develop a structural model that integrates a ’supply chain of credit’ with a model
of ’downstream competition’ for customers and rationalizes the emergence of the granular networks that shape firms risk exposure. We exploit information from a proprietary dataset to identify a number of empirical regularities that correlate the use of factoring services offered by the bank with customers’ and suppliers’ capital structure determinants.


Bottazzi, L, G Gopalakrishna and C Tebaldi (2023), ‘DP18468 Supply Chain Finance and Firm Capital Structure‘, CEPR Discussion Paper No. 18468. CEPR Press, Paris & London. https://cepr.org/publications/dp18468