Firms as Financial Intermediaries : Evidence from Trade Credit Data
The authors argue that non-financial firms act as intermediaries, by channeling short-term funds from the financial institutions in an economy, to their best use. Non-financial firms act in this way because they may have a comparative advantage in...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2001/10/1615098/firms-financial-intermediaries-evidence-trade-credit-data http://hdl.handle.net/10986/19511 |
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okr-10986-195112021-04-23T14:03:43Z Firms as Financial Intermediaries : Evidence from Trade Credit Data Demirguc-Kunt, Asli Maksimovic, Vojislav ACCOUNTING ADVERSE SELECTION ANNUAL OBSERVATIONS ARBITRAGE ASSETS BALANCE SHEET BANK LENDING BANK LOANS BANKING RELATIONSHIPS BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKS BORROWING COMPARATIVE ADVANTAGE COMPETITIVENESS CORPORATE FINANCE DEBT DEVELOPMENT ECONOMICS DIVIDENDS ECONOMIC CONDITIONS ECONOMIC DEVELOPMENT ECONOMIC GROWTH FINANCIAL CONTRACTS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEMS GDP GROSS DOMESTIC PRODUCT GROWTH RATE INEFFICIENCY INFLATION INFLATION RATE INSTITUTIONAL DEVELOPMENT INVENTORY LAWS LEGAL INFRASTRUCTURE LEGAL PROVISIONS LEGAL SYSTEMS LENDING RATES LESS DEVELOPED COUNTRIES MARKET ECONOMIES MARKET POWER NET SALES OPPORTUNITY COST PER CAPITA INCOME POLICY DECISIONS PREDICTIONS PRICE DISCRIMINATION PRIVATE BANKING PROFITABILITY PROPERTY RIGHTS PROPRIETARY INFORMATION REORGANIZATION RETURN ON EQUITY SECURITIES STATE BANKS STATE OWNERSHIP STOCK MARKETS SUBSTITUTION EFFECT VALUATION ENTERPRISES FINANCIAL INTERMEDIARIES TRADE INTEGRATION CREDIT INTERMEDIARY FUNDING CAPACITY FINANCIAL INSTITUTIONS EXTERNAL FINANCE BANKING SYSTEMS FINANCIAL SYSTEMS LEGAL FRAMEWORK PRIVATE BANKS ENTERPRISES VALUATION The authors argue that non-financial firms act as intermediaries, by channeling short-term funds from the financial institutions in an economy, to their best use. Non-financial firms act in this way because they may have a comparative advantage in exploiting informal means of ensuring that borrowers repay. These considerations suggest that to optimally exploit their advantage in providing trade credit to some classes of borrowers, firms should obtain external financing from financial intermediaries, and markets, when this is efficient. Thus the existence of a large banking system is consistent with these considerations. Using firm-level data for thirty nine countries, the authors compute turnovers in payables, and receivables, and examine how they differ across financial systems. They find that the development level of a country's legal infrastructure, and banking system predicts the use of trade credit. Firms' use of bank debt is higher relative to their use of trade credit in countries with efficient legal systems. Bur firms in countries with large, privately owned banking systems, offer more financing to their customers, and take more financing from them. The authors' findings suggest that trade credit is a complement to lending by financial intermediaries, and should not be viewed by policymakers as a substitute. 2014-08-20T19:26:20Z 2014-08-20T19:26:20Z 2001-10 http://documents.worldbank.org/curated/en/2001/10/1615098/firms-financial-intermediaries-evidence-trade-credit-data http://hdl.handle.net/10986/19511 English en_US Policy Research Working Paper;No. 2696 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCOUNTING ADVERSE SELECTION ANNUAL OBSERVATIONS ARBITRAGE ASSETS BALANCE SHEET BANK LENDING BANK LOANS BANKING RELATIONSHIPS BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKS BORROWING COMPARATIVE ADVANTAGE COMPETITIVENESS CORPORATE FINANCE DEBT DEVELOPMENT ECONOMICS DIVIDENDS ECONOMIC CONDITIONS ECONOMIC DEVELOPMENT ECONOMIC GROWTH FINANCIAL CONTRACTS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEMS GDP GROSS DOMESTIC PRODUCT GROWTH RATE INEFFICIENCY INFLATION INFLATION RATE INSTITUTIONAL DEVELOPMENT INVENTORY LAWS LEGAL INFRASTRUCTURE LEGAL PROVISIONS LEGAL SYSTEMS LENDING RATES LESS DEVELOPED COUNTRIES MARKET ECONOMIES MARKET POWER NET SALES OPPORTUNITY COST PER CAPITA INCOME POLICY DECISIONS PREDICTIONS PRICE DISCRIMINATION PRIVATE BANKING PROFITABILITY PROPERTY RIGHTS PROPRIETARY INFORMATION REORGANIZATION RETURN ON EQUITY SECURITIES STATE BANKS STATE OWNERSHIP STOCK MARKETS SUBSTITUTION EFFECT VALUATION ENTERPRISES FINANCIAL INTERMEDIARIES TRADE INTEGRATION CREDIT INTERMEDIARY FUNDING CAPACITY FINANCIAL INSTITUTIONS EXTERNAL FINANCE BANKING SYSTEMS FINANCIAL SYSTEMS LEGAL FRAMEWORK PRIVATE BANKS ENTERPRISES VALUATION |
| spellingShingle |
ACCOUNTING ADVERSE SELECTION ANNUAL OBSERVATIONS ARBITRAGE ASSETS BALANCE SHEET BANK LENDING BANK LOANS BANKING RELATIONSHIPS BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKS BORROWING COMPARATIVE ADVANTAGE COMPETITIVENESS CORPORATE FINANCE DEBT DEVELOPMENT ECONOMICS DIVIDENDS ECONOMIC CONDITIONS ECONOMIC DEVELOPMENT ECONOMIC GROWTH FINANCIAL CONTRACTS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEMS GDP GROSS DOMESTIC PRODUCT GROWTH RATE INEFFICIENCY INFLATION INFLATION RATE INSTITUTIONAL DEVELOPMENT INVENTORY LAWS LEGAL INFRASTRUCTURE LEGAL PROVISIONS LEGAL SYSTEMS LENDING RATES LESS DEVELOPED COUNTRIES MARKET ECONOMIES MARKET POWER NET SALES OPPORTUNITY COST PER CAPITA INCOME POLICY DECISIONS PREDICTIONS PRICE DISCRIMINATION PRIVATE BANKING PROFITABILITY PROPERTY RIGHTS PROPRIETARY INFORMATION REORGANIZATION RETURN ON EQUITY SECURITIES STATE BANKS STATE OWNERSHIP STOCK MARKETS SUBSTITUTION EFFECT VALUATION ENTERPRISES FINANCIAL INTERMEDIARIES TRADE INTEGRATION CREDIT INTERMEDIARY FUNDING CAPACITY FINANCIAL INSTITUTIONS EXTERNAL FINANCE BANKING SYSTEMS FINANCIAL SYSTEMS LEGAL FRAMEWORK PRIVATE BANKS ENTERPRISES VALUATION Demirguc-Kunt, Asli Maksimovic, Vojislav Firms as Financial Intermediaries : Evidence from Trade Credit Data |
| relation |
Policy Research Working Paper;No. 2696 |
| description |
The authors argue that non-financial
firms act as intermediaries, by channeling short-term funds
from the financial institutions in an economy, to their best
use. Non-financial firms act in this way because they may
have a comparative advantage in exploiting informal means of
ensuring that borrowers repay. These considerations suggest
that to optimally exploit their advantage in providing trade
credit to some classes of borrowers, firms should obtain
external financing from financial intermediaries, and
markets, when this is efficient. Thus the existence of a
large banking system is consistent with these
considerations. Using firm-level data for thirty nine
countries, the authors compute turnovers in payables, and
receivables, and examine how they differ across financial
systems. They find that the development level of a
country's legal infrastructure, and banking system
predicts the use of trade credit. Firms' use of bank
debt is higher relative to their use of trade credit in
countries with efficient legal systems. Bur firms in
countries with large, privately owned banking systems, offer
more financing to their customers, and take more financing
from them. The authors' findings suggest that trade
credit is a complement to lending by financial
intermediaries, and should not be viewed by policymakers as
a substitute. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Demirguc-Kunt, Asli Maksimovic, Vojislav |
| author_facet |
Demirguc-Kunt, Asli Maksimovic, Vojislav |
| author_sort |
Demirguc-Kunt, Asli |
| title |
Firms as Financial Intermediaries : Evidence from Trade Credit Data |
| title_short |
Firms as Financial Intermediaries : Evidence from Trade Credit Data |
| title_full |
Firms as Financial Intermediaries : Evidence from Trade Credit Data |
| title_fullStr |
Firms as Financial Intermediaries : Evidence from Trade Credit Data |
| title_full_unstemmed |
Firms as Financial Intermediaries : Evidence from Trade Credit Data |
| title_sort |
firms as financial intermediaries : evidence from trade credit data |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2001/10/1615098/firms-financial-intermediaries-evidence-trade-credit-data http://hdl.handle.net/10986/19511 |
| _version_ |
1764439918828847104 |