{"title":"Does trade credit absorb adverse shocks? Evidence on SMEs in Japan","authors":"Daisuke Tsuruta , Hirofumi Uchida","doi":"10.1016/j.pacfin.2024.102556","DOIUrl":null,"url":null,"abstract":"<div><div>The aim of this paper is to examine whether trade credit can help absorb adverse shocks to firms. When firms encounter exogenous adverse shocks, if relaxation of terms of credit payment to suppliers can hold back the level of firms' real activities, then they do not need to reduce their purchases from suppliers. We test this hypothesis by using data of SMEs (small- and medium-sized enterprises) from two corporate surveys taken in Japan after the Global Financial Crisis and COVID-19. We find that firms with extended payment periods are still likely to reduce their purchases from suppliers, which indicates trade credit does not help to absorb adverse shocks.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":null,"pages":null},"PeriodicalIF":4.8000,"publicationDate":"2024-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Pacific-Basin Finance Journal","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0927538X24003081","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
The aim of this paper is to examine whether trade credit can help absorb adverse shocks to firms. When firms encounter exogenous adverse shocks, if relaxation of terms of credit payment to suppliers can hold back the level of firms' real activities, then they do not need to reduce their purchases from suppliers. We test this hypothesis by using data of SMEs (small- and medium-sized enterprises) from two corporate surveys taken in Japan after the Global Financial Crisis and COVID-19. We find that firms with extended payment periods are still likely to reduce their purchases from suppliers, which indicates trade credit does not help to absorb adverse shocks.
期刊介绍:
The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.