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Credit Use (credit + use)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

On the Determinants and Dynamics of Trade Credit Use: Empirical Evidence from Business Start-ups

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 1-2 2006
Nancy Huyghebaert
Abstract: Business start-ups provide an excellent opportunity for testing various hypotheses on why firms use trade credit. At the time of start-up, failure risk and financial constraints are typically large. Also, start-ups have no established relationships with banks and suppliers. The literature has related all these features to trade credit use. Moreover, as firms grow older, these characteristics become less pronounced, allowing us to test the dynamics of trade credit use. We find that start-ups use more trade credit when financial constraints are large, when suppliers have a financing advantage over banks in financing high-risk firms, when entrepreneurs value private benefits of control and when transaction costs are important. Furthermore, the dynamic implications of these theories are supported. [source]

On the Optimality of Restricting Credit: Inflation Avoidance and Productivity

THE JAPANESE ECONOMIC REVIEW, Issue 3 2000
Max Gillman
The paper presents a model in which the consumer uses up resources in order to avoid the inflation tax through the use of exchange credit. In an example economy without capital, the credit tax is optimal when the resource loss from credit use dominates the productivity effect and the inefficiency of substitution towards leisure as a result of the credit tax. The paper also examines second-best inflation policy in this context, given a credit tax. It then extends the economy to an endogenous growth setting and shows how restricting inflation avoidance can increase productivity. JEL Classification Numbers: E13, E51, E61, G21. [source]