@techreport{d6b96c4515c34267a33c3d1dd5b83e6d,
title = "Trade credit: Elusive insurance of firm growth",
abstract = "Firms depend heavily on trade credit. This paper introduces a trade credit network into a structural model of the economy. In an empirical analysis of the model, we find that trade credit is an elusive insurance: as long as a firm is financially unconstrained and times are good, more trade credit enhances sales stability and insures against shocks to the firm{\textquoteright}s suppliers. However, if a firm becomes financially constrained or times are bad, trade credit fails to insure against supplier shocks. Moreover, if the firm is low on cash, trade credit propagates shocks from a supplier to its customer.",
keywords = "trade credit, insurance, credit chains, spillover effects",
author = "Dennis Bams and Jaap Bos and Magdalena Pisa",
year = "2016",
doi = "10.26481/umagsb.2016029",
language = "English",
series = "GSBE Research Memoranda",
publisher = "Maastricht University, Graduate School of Business and Economics",
number = "029",
address = "Netherlands",
type = "WorkingPaper",
institution = "Maastricht University, Graduate School of Business and Economics",
}