Investment in trade credit in small business start-ups: evidence from Spain during a financial crisis

This study analyses start-up firms' investment in trade credit during the period 2011-2014. We find that new or recently created firms had greater investments in trade credit than established firms. Moreover, the results indicate that start-up firms' investment in trade credit did not depe...

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Bibliographic Details
Published inApplied economics Vol. 55; no. 3; pp. 273 - 282
Main Authors Baños-Caballero, Sonia, García-Teruel, Pedro J.
Format Journal Article
LanguageEnglish
Published London Routledge 14.01.2023
Taylor & Francis Ltd
Subjects
access to finance
bargaining power
Companies
Credit
Customers
Economic analysis
Economic crisis
Economic theory
Finance
financial crisis
Investments
Payments
Small business
Start-ups
trade credit
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Summary:This study analyses start-up firms' investment in trade credit during the period 2011-2014. We find that new or recently created firms had greater investments in trade credit than established firms. Moreover, the results indicate that start-up firms' investment in trade credit did not depend on their bargaining power or access to external finance. These findings suggest that the reason start-ups invested more in accounts receivable than established firms could be due to late payments or their granting credit to low-quality customers who cannot obtain credit from established firms.
ISSN:0003-6846
1466-4283
DOI:10.1080/00036846.2022.2086685