Bank Credit and Trade Credit After the Financial Crisis: Evidence From Rural Galicia

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Bank Credit and Trade Credit After the Financial Crisis: Evidence From Rural GaliciaDate
2021Citation
Peón, D., & Guntín, X. (2021). Bank credit and trade credit after the financial crisis: evidence from rural Galicia. Journal of Business Economics and Management, 22(3), 616-635. https://doi.org/10.3846/jbem.2021.14270
Abstract
[Abstract] Access to external finance is a key challenge for the creation, survival and growth of SMEs.
This article delves into the “weak funding” handicap of rural small firms (SEs): the access to bank
financing and the substitutive role of trade credit for entrepreneurs in rural areas when they faced
bank credit constraints. Considering SEs in Galicia (Spain), a paradigmatic case in Europe of rural
areas in demographic decline with a strong impact of the Spanish sovereign and banking crisis of
2008–2012. There’s evidence of firms in rural areas facing a differential negative flow of bank credit
during the financial crisis, especially in the manufacturing and construction sectors, that dissipated
afterwards. Then, using a panel data approach that considers the determinants of trade credit, the
complementary and substitutive hypotheses are tested to estimate the impact of bank credit restrictions over trade credit.
Keywords
Trade credit
Bank credit constraints
Rural development
SME
SE
Entrepreneurship
Bank credit constraints
Rural development
SME
SE
Entrepreneurship
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Rights
Atribución 4.0 Internacional
ISSN
1611-1699