Journal Article

Trade credit: why do production firms act as financial intermediaries?

Abstract: Trade credit remains the single largest source of short-term business credit in the United States and other nations around the world. Why do production firms act as financial intermediaries - a role usually reserved for banks? In \\"Trade Credit: Why Do Production Firms Act as Financial Intermediaries?\\" Mitchell Berlin focuses on explanations that view trade credit as a method of monitoring and enforcing loan contracts to relatively risky firms. He also examines explanations in which a firm's long-term supply relationship helps it to make better credit decisions than a bank world.

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Business Review

Publication Date: 2003

Issue: Q3

Pages: 21-28