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Trade credit and bank relationships: evidence from pre-World War I Belgium

[journal article]

Deloof, Marc; Overfelt, Wouter van

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Abstract We investigate the determinants of trade credit granted by suppliers in a historical environment which was characterized by high information asymmetries and strong banks, focusing on the role of bank-firm relationships. Our results, which are based on a unique sample of 535 firm-year observations for 125 listed Belgian firms in four dominant industries in the period 1905-1909, are generally consistent with the financing role of trade credit. They suggest that trade credit was a tool for channeling funds from firms with close bank ties to other firms, which is consistent with findings for contemporary developing countries.
Classification Economic Sectors; Financial Planning, Accountancy; Social History, Historical Social Research
Free Keywords trade credit; bank-firm relationships; Pre-World War I Belgium; economic institutions
Document language English
Publication Year 2010
Page/Pages 26 p.
Journal Applied Economics (2010)
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)