Journal of Corporate Finance Vol. 60 2020
Do bank bailouts affect the provision of trade credit?
Abstract
We document that borrowers of banks that received capital support under TARP/CPP significantly increased their quarterly provision of trade credit (accounts receivable) during the crisis by 5.2%, while borrowers of other banks did not. The effect is strongest in 2008Q4, and larger for pre-crisis riskier, growth-oriented and bank-dependent firms and for firms that borrow from pre-crisis smaller, less profitable and better capitalized CPP banks. Our difference-in-differences analysis shows that the effect is caused by CPP and not by heterogeneity between firms, banks and time periods. Our study provides novel evidence that suggests a beneficial multiplier effect of bank bailouts.
- DOI
- 10.1016/j.jcorpfin.2019.101522
- Volume
- 60
- Pages
- 101522
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref