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Trade Credit, Financial Intermediary Development and Industry Growth

Raymond Fisman and Inessa Love

No 8960, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent work suggests that financial development is important for economic growth, since financial markets more effectively allocate capital to firms with high value projects. For firms in poorly developed financial markets, implicit borrowing in the form of trade credit may provide an alternative source of funds. We show that industries with higher dependence on trade credit financing exhibit higher rates of growth in countries with weaker financial institutions. Furthermore, consistent with barriers to trade credit access among young firms, we show that most of the effect that we report comes from growth in the size of pre-existing firms.

JEL-codes: G15 G21 (search for similar items in EconPapers)
Date: 2002-05
New Economics Papers: this item is included in nep-ent, nep-fin and nep-mfd
Note: CF
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Published as Raymond Fisman & Inessa Love, 2003. "Trade Credit, Financial Intermediary Development, and Industry Growth," Journal of Finance, American Finance Association, vol. 58(1), pages 353-374, 02.

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Journal Article: Trade Credit, Financial Intermediary Development, and Industry Growth (2003) Downloads
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