The Determinants of Corporate Trade Credit Policies in a Bank‐dominated Financial Environment: the Case of Finnish Small Firms

This paper examines trade credit policies of small firms operating in a bank‐dominated environment (Finland). We find that creditworthiness and access to capital markets are important determinants of trade credit extended by sellers. The level of purchases is positively correlated with the level of accounts payable. Larger and older firms and firms with strong internal financing are less likely to use trade credit, whereas firms with a high ratio of current assets to total assets, and firms subject to loan restructurings use it more. Negative loan decisions by financial intermediaries increase and a close bank‐borrower relationship decreases the probability that a firm does not take advantage of trade credit discounts.     

经济政策不确定性与企业贷款成本

基于大样本微观银行信贷数据,本文研究经济政策不确定性对企业的银行贷款成本的影响。研究发现,经济政策不确定性升高导致企业的银行贷款成本增加,且使得在中小型银行贷款的企业成本增加更多。异质性分析表明,经济政策不确定性升高对受政策因素影响较大的企业如小微企业、私营企业等的银行贷款成本的影响更为明显。进一步,对企业的银行贷款违约风险的研究发现,随着经济政策不确定性升高,企业的银行贷款违约风险反而降低。这表明,经济政策不确定性升高使得银行选择风险评级更低的贷款,符合谨慎性动机。本文研究结论表明,经济政策不确定性升高时,银行“自我保险”动机的增强使得企业的银行贷款成本增加,这在中小型银行中表现得更加明显,同时也更多地转嫁给中小企业。本文为经济政策不确定性对企业投资、宏观经济波动等的研究提供了微观解释机制,并揭示了政府经济政策的一致性、稳定性对维护金融稳定的重要作用。     

Bank Loan Availability and Trade Credit Demand

This paper investigates the effects of bank loan availability on the trade credit and credit card demand of small firms, using firm‐level data from the 1995 Credit, Banks, and Small Business Survey, conducted by the National Federation of Independent Business. We find that firms increase their demand for trade credit and credit card debt when facing credit constraints imposed by banks. These results provide evidence of a pecking order of debt financing, where firms increase their reliance on potentially expensive sources of funds when bank loans are not available.     

所有权、产业政策指导与银行贷款利率

以上市公司披露的银行信贷数据为样本,实证分析产业政策指导对企业贷款利率的影响。结果表明:产业政策指导中的重点支持类企业和一般支持类企业往往获得了银行贷款的利率优惠,商业银行较好地落实了国家的产业政策;相比于民营企业,与政府有密切关系的国有企业获得了较低的贷款利率,商业银行的信贷决策表现出一定程度的所有权金融歧视。     

Are lending relationships beneficial or harmful for public credit guarantees? Evidence from Japan's Emergency Credit Guarantee Program

This paper examines the effectiveness of Japan's Emergency Credit Guarantee (ECG) Program set up during the financial turmoil following the failure of Lehman Brothers, in increasing credit availability and improving the ex-post performance of small businesses. In particular, using a unique firm–bank matched dataset, the paper examines whether lending relationships enhanced or dampened the effects of the ECG program. It is found that the ECG program significantly improved credit availability for firms using the program. However, when it was a relationship lender (main bank) that extended an ECG loan, the increased availability was partially, if not completely, offset by a decrease in non-ECG loans by the same bank. Further, propensity score matching estimations show that the ex-post performance of firms that received ECG loans from the main bank deteriorated more than that of firms that received non-ECG loans. We do not find such loan “substitution” or performance “deterioration” effects when a non-main bank extended ECG loans. Our findings suggest that close firm–bank relationships may have perverse effects on the efficacy of public credit guarantees.     

The Benefits of Relationship Banking: Evidence from Small Business Financing in Finland

Using unique small business credit-file data from a major Finnish bank, I analyze how relationship characteristics are associated with loan interest rates. Data includes the effective loan rate and variables that describe the duration and scope of relationship, collateralization, firm characteristics, bank’s internal risk rating, and loan characteristics. The results show that longer duration tends to lower the cost of credit and that a long-term bank/firm relationship is beneficial especially to high-risk firms. As the relationship matures, the loan premiums for high-risk firms decrease at higher rate than for low-risk firms.     

The impact of foreign bank entry in emerging markets: Evidence from India

This paper uses the entry of foreign banks into India during the 1990s—analyzing variation in both the timing of the new foreign banks’ entries and in their location—to estimate the effect of foreign bank entry on domestic credit access and firm performance. In contrast to the belief that foreign bank entry should improve credit access for all firms, the estimates indicate that foreign banks financed only a small set of very profitable firms upon entry, and that on average, firms were 8 percentage points less likely to have a loan after a foreign bank entry because of a systematic drop in domestic bank loans. Similar estimates are obtained using the location of pre-existing foreign firms as an instrument for foreign bank locations. Moreover, the observed decline in loans is greater among smaller firms, firms with fewer tangible assets, and firms affiliated with business groups. The drop in credit also appears to adversely affect the performance of smaller firms with greater dependence on external financing. Overall, this evidence is consistent with the exacerbation of information asymmetries upon foreign bank entry.     

Offshore operations and bank loan contracting: Evidence from firms that set up subsidiaries in offshore financial centers

We examine the effects of a multinational firm's subsidiary operations in offshore financial centers (OFCs) on bank loan contracting terms. Using a propensity score matched cross-country sample of firms with and without OFC subsidiaries, we find that firms with OFC subsidiaries receive less favorable loan terms than firms without OFC subsidiaries. The results from a difference-in-differences analysis and an analysis of a firm's mutation from a non-OFC firm to an OFC firm support the causal effect of offshore operations on the unfavorable loan terms. Furthermore, focusing on firms with OFC subsidiaries, we find that the intensity of offshore operations affects loan terms unfavorably. We also find that the unfavorable effect is more pronounced for more opaque firms and for firms that are headquartered in countries or jurisdictions with weaker legal enforcement. Our findings indicate that banks view offshore operations of borrowers as a credit risk-increasing factor.     

Corporate social responsibility,credit rating,and private debt contracting: new evidence from syndicated loan market

We examine the impact of corporate social responsibility (CSR) activities on loan spreads of syndicated bank loans, with a particular interest in how CSR and credit ratings are interrelated as a joint determinant of loan spreads. Focusing on private debt contracts, we show that both CSR strengths and concerns are related to their loan spreads. CSR strengths work to lower firm risk, hence reducing the loan spread, whereas CSR concerns increase firm risk, thus increasing the loan spread. Once we include detailed credit rating information in the models, however, CSR concerns lose significance, but CSR strengths remain significantly related to the loan spread. We also find that both CSR strengths and CSR concerns are related to loan spread for non-rated firms, but the CSR concern effect is stronger than the CSR strength effect for these firms. A further test shows that firm risk measured by stock return volatility plays as a direct channel through which a firm’s CSR activities affect loan spreads, whose result lends further support to our main results. Overall, our results provide strong evidence that CSR matters to the pricing of loan contracts beyond credit rating information and the results remain robust to the possible firm size effect and the endogeneity issues.     

Sovereign stress and SMEs’ access to finance: Evidence from the ECB's SAFE survey

We study the effect of sovereign stress on SMEs’ capital structure using restricted-access data from the European Central Bank. We find that during the sovereign debt crisis, and controlling for borrowers’ quality, firms in stressed countries became more likely to be denied credit, to be credit rationed, and to face higher loan rates. Less creditworthy firms were not more likely to become credit constrained, suggesting no flight to quality in lending. We also find that in order to make up for the decline in bank credit firms in stressed countries began relying considerably more on retained earnings and government subsidies.     

Do SMEs Benefit from Unconventional Monetary Policy and How? Microevidence from the Eurozone

We study the impact of the announcement of the European Central Bank's (ECB's) Outright Monetary Transactions Program on small firms’ access to finance using a matched firm‐bank data set from eight Eurozone countries. We find that following the announcement, credit access improved relatively more for firms borrowing from banks with high balance sheet exposures to impaired sovereign debt, with such firms less likely to be refused a loan or to be price rationed. Loan terms also improved as manifested by lengthening of loan maturities. Unconventional monetary policy has a positive impact on firms’ investment and profitability, while its effect on firm innovation is weaker.     

Did the securitization market freeze affect bank lending during the financial crisis? Evidence from a credit register

Using data from the Italian Credit Register we identify the adverse effect of the freeze of the securitization market on bank lending during the crisis of 2007–2008. Applying a differences-in-differences estimation to data on firms that borrow from multiple banks, we single out credit supply by including firm fixed effects. Our results show that the degree to which banks tightened credit supply to nonfinancial firms is positively related to the share of loans they securitized before the crisis. The tightening translated into lower credit growth, higher interest rates, lower probability of accepting loan applications and higher probability of relationship termination. Firms were unable to fully compensate the negative credit supply shock, which suggests that the securitization freeze played a role in reducing aggregate credit availability.     

Effect of rollover risk on default risk: Evidence from bank financing

We study the effect of rollover risk on the risk of default using a comprehensive database of U.S. industrial firms during 1986–2013. Dependence on bank financing is the key driver of the impact of rollover risk on default risk. Default risk and rollover risk present a significant positive relation in firms dependent on bank financing. In contrast, rollover risk is uncorrelated with default probability in the case of firms that do not rely on bank financing. Our measure of rollover risk is the amount of long-term debt maturing in one year, weighted by total assets. In the case of a firm that depends on bank financing, an increase of one standard deviation in this measure leads to a significant increase of 3.2% in its default probability within one year. Other drivers affecting the interaction between rollover risk and default risk are whether a firm suffers from declining profitability and has poor credit. Additionally, rollover risk's impact on default probability is stronger during periods when credit market conditions are tighter.     

货币政策、外部融资依赖与企业业绩

作为国家宏观调控重要工具之一,货币政策调整会影响企业融资行为进而影响企业经营业绩.运用我国上市企业数据研究发现,货币政策紧缩时期,企业面临较强的融资约束,银行借款减少,转而寻求商业信用.由于商业信用净额增加小于银行借款减少,货币政策紧缩导致企业融资不足使得企业业绩增长放缓,且外部融资依赖程度越高的企业受到的影响越大,但该影响只存在于非国有企业.研究结论有助于理解货币政策对企业业绩的传导机制,对处于三期叠加时期的我国企业与我国经济都具有一定的实践意义.     

Too sunny to borrow: Sunshine and borrower discouragement

We test the hypothesis that sunshine affects the discouragement of borrowing firms. Using a sample of approximately 45,000 firms from 124 countries for the period 2010–2020, we find that higher sunshine is associated with a greater probability of being discouraged for the borrowing firm. Furthermore, we establish that the discouraging impact of sunshine on the decision to apply for a loan is only observed in low latitude zones. We explain these findings by arguing that more sunshine creates a negative mood in hot regions. Additional results suggest that managerial features affect the discouraging impact of sunshine.     

Does bank competition alleviate credit constraints in developing countries?

Whether competition helps or hinders firms’ access to finance, particularly in the developing world, is in itself a much debated question in the economic literature and in policy circles. This paper considers the consequences of bank competition on credit constraints using firm level data covering 69 developing and emerging countries. In addition to the classical concentration measure, competition is assessed by computing three non-structural measures (Boone indicator, Lerner index and H-statistic). The results show that bank competition alleviates credit constraints and that bank concentration measure is not a robust predictor of a firm’s access to finance. The study highlights that bank competition not only leads to less severe loan approval decisions but also reduces borrower discouragement.     

Bank loans and bond prices

We test whether bank loans change public bond yields. A 25% increase in bank debt raises bond yields by 8 bps, reflecting a trade-off between the benefits of bank cross-monitoring and higher bond risk. This effect is smaller for firms with no credit default swaps (CDSs) and with junk debt—scenarios where bank monitoring is most valuable. It is unlikely that firms with bank debt are riskier, because they are less likely to be downgraded and have lower loan spreads. We find similar results using a natural experiment around the 2014 oil shock. Our results highlight how bond yields depend on incentive conflicts among creditors.     

The effect of relationship banking on firm efficiency and default risk

Does relationship bank oversight reduce firm default risk and improve firm operational efficiency? I find that a new loan from a relationship bank reduces the default probability and increases the efficiency of a borrowing firm, benefiting both banks and borrowers. Moreover, inefficient and less creditworthy firms experience the highest reductions in their default risks and improvements in their efficiencies in the years following new relationship bank loans. Further, these benefits are disrupted when the relationship bank is acquired.     

财政存款、银行竞争与僵尸企业形成

银行以优惠利率贷款为低质企业“输血”,是企业僵尸化的重要成因。然而,基于中国背景的文献,对银行“输血”动机的研究并不充分,本文从地方财政存款影响银行信贷分配的视角,分析僵尸企业形成的内在机理。首先,通过构建理论模型对银行竞争财政存款及影响企业融资和投资绩效进而僵尸化的逻辑进行刻画,而后依据省份财政存款、银行竞争与微观企业财务数据,对理论推论进行了验证。研究发现,财政存款占当地存款比重越大,企业僵尸化概率越高,并且银行竞争助长了企业僵尸化。此外,基于工具变量估计处理了核心变量的内生性问题,并进行了多种稳健性检验。机制检验表明,财政存款的信贷分配效应,促使企业过度投资,导致经营绩效恶化,进而提高了企业僵尸化概率,银行竞争则会加剧该效应。本文拓展了财政存款的经济效应与僵尸企业形成方面的文献,对于僵尸企业治理有一定参考意义。     

Trade Credit,the Financial Crisis,and SME Access to Finance

Mounting evidence indicates that firms, particularly SMEs, suffered from a significant credit crunch during this crisis. We analyze for the first time whether trade credit provided an alternative source of external finance to SMEs during the crisis. Using firm‐level Spanish data we find that credit constrained SMEs depend on trade credit, but not bank loans, and that the intensity of this dependence increased during the financial crisis. Unconstrained firms, in contrast, are dependent on bank loans but not on trade credit.