## Does Trade Credit Substitute Bank Credit? Evidence From Firm-Level Data

_IMF Working Papers, August 1, 2003_

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## Bibliographic details
- Authors: Guido De Blasio
- Published: August 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451858129.001

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### Summary
- Author: Guido De Blasio
- Date: August 1, 2003
- Core question: Tests the Meltzer (1960) hypothesis that firms substitute trade credit for bank credit during periods of monetary tightening by examining micro data on Italian manufacturing firms' inventory behavior.
- Main conclusion: Inventory investment is constrained by the availability of trade credit; however, the magnitude of the substitution effect is not sizable.
- Interpretation: Findings align with micro theories of trade credit and evidence on firm practices, which indicate credit terms display modest variations over time.

### Key Findings and Evidence
- Inventory investment of Italian manufacturing firms is constrained by availability of trade credit.
- The substitution effect of trade credit for bank credit during monetary tightening is present but quantitatively limited (described as "not sizable").
- Results are consistent with micro-theoretical expectations and observed modest temporal variation in credit terms.

### Subjects and Keywords
- Subjects: Bank credit, Credit, External debt, Financial statements, Monetary policy, Monetary tightening, Money, Public financial management (PFM), Trade credits
- Keywords: Bank credit, Credit, Financial statements, Manufacturing Firms, Monetary Policy, Monetary tightening, TC coefficient, TC constraint, TC variable, TC-bank credit substitution hypothesis, Trade Credit, Trade credits, underling TC determinant, WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/does-trade-credit-substitute-bank-credit-evidence-from-firm-level-data-16682_