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The Interdependence between Trade Credit and Bank Lending: Commitment in Intermediary Firm Relationships

2014; Wiley; Volume: 53; Issue: 4 Linguagem: Inglês

10.1111/jsbm.12115

0047-2778

Ana Paula Matias Gama, Howard Van Auken,

Firm Innovation and Growth

Journal of Small Business ManagementVolume 53, Issue 4 p. 886-904 Regular Article The Interdependence between Trade Credit and Bank Lending: Commitment in Intermediary Firm Relationships Ana Paula Matias Gama, Ana Paula Matias GamaAna Paula Matias Gama is assistant professor in the Department of Management and Economic at the University of Beira Interior, Covilhã, Portugal.Search for more papers by this authorHoward Van Auken, Corresponding Author Howard Van AukenHoward Van Auken is university professor of Management of Iowa State University, Ames, IA.Address correspondence to: Howard Van Auken, Iowa State University, 3363 Gerdin, Ames, IA 50011. E-mail: [email protected]Search for more papers by this author Ana Paula Matias Gama, Ana Paula Matias GamaAna Paula Matias Gama is assistant professor in the Department of Management and Economic at the University of Beira Interior, Covilhã, Portugal.Search for more papers by this authorHoward Van Auken, Corresponding Author Howard Van AukenHoward Van Auken is university professor of Management of Iowa State University, Ames, IA.Address correspondence to: Howard Van Auken, Iowa State University, 3363 Gerdin, Ames, IA 50011. E-mail: [email protected]Search for more papers by this author First published: 04 April 2014 https://doi.org/10.1111/jsbm.12115Citations: 20 Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Abstract This study investigates the interdependence between trade and bank credit among 468 Portuguese small and medium-sized enterprises (SMEs). The results show that a single bank relationship is prevalent among Portuguese SMEs, indicating that the proprietary borrower information that banks obtain through their relationship results in an information monopoly that creates a holdup problem and leads to high interest rates. Suppliers that can control their customers' credit risk may provide additional credit and thus help alleviate concerns associated with holdup costs. Trade credit is a viable alternative to short-term debt, especially when firms' main bank is unwilling to increase its exposure to liquidity constraints. References Antov, D., and C. Atanasova (2007). "Trade Credit Financing: How Expensive Is It Really?," Working paper, http://ssrs.com/abstract=967522. Arellano, M. (2003). Panel Data Econometric. Oxford: Oxford University Press. Arellano, M., and S. Bond (1991). 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