Trade Credit and Its Role in Entrepreneurial Finance
Series
Entrepreneurial finance
ISBN
978-0-19-539124-4
Type
book section
Date Issued
2012
Author(s)
Editor(s)
Cumming, Douglas
Abstract
Recent research has found evidence of the central role of trade credit in the financing of small businesses. In the United States, for example, trade credit is used by about 60 percent of small businesses; such a large incidence of use is not observed in any other financial service except checking accounts. This article analyzes several aspects of the trade credit agreement. It starts by explaining why trade credit is such an extended phenomenon in spite of the existence of a specialized financial sector. Then it discusses several aspects that make trade credit a unique and not fully contractual arrangement, whose value depends to a great extent on the value of the commercial relationship between the supplier and the buyer. It then focuses on the value of trade credit for entrepreneurial firms.
Language
English
HSG Classification
not classified
Refereed
No
Book title
The Oxford handbook of entrepreneurial finance
Publisher
Oxford University Press
Publisher place
Oxford
Start page
526
End page
557
Pages
32
Subject(s)
Division(s)
Eprints ID
216972