Trade Credit and Industry Dynamics: Evidence from Trucking Firms
MetadataShow full item record
Long payment terms are a strong impediment to the entry and survival of liquidity-constrained firms. To test this idea and its implications, I consider the effect of a reform restricting the trade credit supply of French trucking firms. In a difference-in-differences setting, I find that trucking firms' corporate default probability decreases by 25% following the restriction. The effect is persistent, concentrated among liquidity-constrained firms, and not offset by a decrease in profits. The restriction also triggers an increase in the entry of small trucking firms.
DepartmentSloan School of Management
The Journal of Finance
BARROT, JEAN-NOËL. “Trade Credit and Industry Dynamics: Evidence from Trucking Firms.” The Journal of Finance 71, no. 5 (September 2016): 1975–2016.