اعتبار تجارت و اعتبار بانک: شواهدی از بحران های مالی اخیر

This paper studies the effect of financial crises on trade credit for a sample of 890 firms in six emerging economies. Although the provision of trade credit increases right after a crisis, it contracts in the following months and years. Firms that are financially more vulnerable to crises extend less trade credit to their customers. We argue that the decline in aggregate trade credit ratios is driven by the reduction in the supply of trade credit that follows a bank credit crunch, consistent with the “redistribution view” of trade credit provision, whereby bank credit is redistributed via trade credit from financially stronger firms to weaker firms.

The emerging markets financial crises of the 1990s present extreme cases of the collapse of institutional financing. Consequently, they provide researchers an opportunity to study the role of alternative sources of financing during periods of severe monetary contraction. Previous evidence from non-crisis settings suggests that trade credit can play an important role by compensating for unavailable bank credit.1 In this paper, we study the use of trade credit during financial crises to examine the role played by trade credit as a last resort for funding under more extreme circumstances. In particular, we study the effects of the 1997 Asian crisis on firms operating in Indonesia, South Korea, Malaysia, the Philippines, and Thailand, and the effects of the 1994 peso devaluation on Mexican firms. We find an increase in the amount of trade credit provided and received immediately after a crisis. Surprisingly, however, the amount of credit provided (as opposed to received) collapses in the aftermath of the crisis, and continues to contract for several years. Our sample contains mostly large, publicly traded companies, which are likely to be the most resilient to crisis events. This makes the post-crisis decline in trade credit provision even more puzzling. The interpretation of these aggregate results presents a familiar identification problem: the decrease in trade credit after the crisis could be due to either the unwillingness of customers to take on more credit (demand effect) or the inability of suppliers to provide such credit (supply effect). Prior research (e.g., Petersen and Rajan, 1997) generally presupposes that firms will take any credit offered, thereby assuming away the problem. Our unique identification strategy relies on pre-crisis indicators of a firm's vulnerability to financial crises together with exogenous crisis events. Firms with more vulnerable financial positions are more likely to be (negatively) affected by crisis events, and are thus more likely to reduce their supply of credit to customers and increase their use of credit from suppliers. We use a firm's reliance on short-term debt as our main indicator of financial vulnerability to a crisis (due to increased interest rates and difficulties in rolling over debt). We find that firms with high short-term debt reduce the provision of trade credit relatively more in response to an aggregate contraction in bank credit, consistent with a reduction in the supply of trade credit caused by the crisis. We find similar results using alternative indicators of a firm's financial health, such as foreign currency denominated debt, cash stocks, and cash flows. The temporary increase in trade credit at the peak of a financial crisis is likely to be caused by the accumulation of unpaid credit until suppliers take write-downs (or buyers resume payments). We conclude that while trade credit terms can be extended temporarily in the short-run, such terms can not fully compensate for the long-term contraction in bank credit that stems from a financial crisis. On the surface, our results seem to contradict previous findings that when bank credit is unavailable, trade credit is often used as a substitute (e.g., Petersen and Rajan, 1997; Nilsen, 2002; Fisman and Love, 2003; and Wilner, 2000). Based on this literature, one might expect that during a financial crisis, when bank credit shrinks, trade credit should become relatively more important as a source of finance and therefore the use of trade credit (scaled by economic activity) should increase. This apparent contradiction is resolved once one takes into account the redistribution view of trade credit, and adapts it to the extreme scenarios imposed by financial crises. The redistribution view of Meltzer (1960), Petersen and Rajan (1997), and Nilsen (2002), among others, posits that firms with better access to capital will redistribute the credit they receive to less advantaged firms via trade credit. However, for redistribution to take place, some firms first need to be able to raise external finance to pass on to less privileged firms.2 During a financial crisis, alternative sources of financing become scarce as stock markets crash and foreign lenders and investors pull out their money. That is, as all the potential sources of funds dry up, there may be nothing left to redistribute through trade credit. In sum, our findings expand the traditional setting of the redistribution view: redistribution shuts down when all sources of finance dry up, as is the case during a financial crisis. Thus, the credit crunch that affects financial lenders also affects non-financial lenders (i.e., trade credit). Consistent with this argument, we also find that countries that experience a sharper decline in bank credit also experience a sharper decline in trade credit. The remainder of the paper is as follows. Section 2 describes our data and presents basic descriptive analysis. In Section 3 we discuss our empirical strategy. In Section 4 we present our results and in Section 5 we conclude.

We study the behavior of trade credit around the time of financial crises. We find an increase in trade credit at the peak of financial crises, followed by a subsequent collapse of this source of financing right after crisis events. Because these findings can be explained by either supply- or demand-side stories, we study firms’ heterogeneous responses to crises and we characterize changes in trade credit policy around the time of a crisis as a function of a firm's relative financial vulnerability to crises. We concentrate our analysis on two alternative indicators of a firm's financial vulnerability, namely short-term debt and liquidity. We find that before a crisis, firms with a high proportion of short-term debt are significant providers of trade credit. After a crisis, however, these firms sharply cut the amount of credit they extend to customers and they increase their reliance on credit from suppliers. In other words, what could be viewed as a favorable pre-crisis financial position (i.e., short-term debt) turns into a heavy disadvantage right after a crisis event. This crisis-related change in financial position is associated with a corresponding change in trade credit policy. We also find some evidence that more liquid firms (i.e., those with high levels of cash stock or greater cash flow generating capacity) extend more credit to their customers and accept less credit from their suppliers. Given that the reduction of trade credit provision is significantly higher for firms whose financial position is more vulnerable to crises, we conclude that a contraction in such credit is most likely driven by a supply-side effect. Thus, in the long aftermath of a crisis, trade credit contracts as a result of both an overall shortage of funds and difficulties experienced by firms that have a high reliance on short-term debt. Our results highlight the importance of aggregate bank credit availability, especially during times of financial crises. Although our paper sheds some new light on the relation between bank credit and trade credit, it leaves many areas for future research. For instance, our data include only a few crises in a small set of countries, and thus we have some concern regarding degrees of freedom. In addition, the patterns we observe for the largest publicly traded firms might not generalize to the rest of the firm population. Thus, more research is needed to test whether the patterns we find hold for different firm sizes and whether our results are robust to a different sample of crisis episodes. Finally, our paper does not answer the question of whether trade credit helps firms survive a crisis, or whether it helps a firm increase market share and profitability after a crisis. These are important questions that warrant more research.