Are trade creditors relationship lenders?

Hirofumi Uchida, Gregory F. Udell, Wako Watanabe

Research output: Contribution to journalArticle

9 Citations (Scopus)

Abstract

We test the hypothesis that trade creditors are relationship lenders using SME data from Japan. We find that the validity of the relationship lending hypothesis depends on the relative bargaining power between the buyer and sellers. Specifically, we find evidence that longer buyer-seller relationships may matter depending on the buyer-seller relative bargaining power. When a buyer depends too much on its main supplier, the supplier does not provide more credit as its relationship with the buyer matures. However, a longer buyer/main-supplier relationship is beneficial because a non-dependent buyer can obtain more overall credit from sellers. Depending on the extent to which this increase is due to an increase in the credit from the main suppliers, our findings are consistent with the relationship lending hypothesis. However, even if the increase mainly comes from other sellers, our findings imply that sellers extract a positive signal from a longer buyer/main-supplier relationship.

Original languageEnglish
Pages (from-to)24-38
Number of pages15
JournalJapan and the World Economy
Volume25-26
DOIs
Publication statusPublished - 2013 Jan

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creditor
supplier
credit
bargaining power
lending
Japan
Buyers
Seller
evidence
Suppliers
Credit

Keywords

  • Credit availability
  • Information accumulation
  • Relationship lending
  • Trade credit

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance
  • Political Science and International Relations

Cite this

Are trade creditors relationship lenders? / Uchida, Hirofumi; Udell, Gregory F.; Watanabe, Wako.

In: Japan and the World Economy, Vol. 25-26, 01.2013, p. 24-38.

Research output: Contribution to journalArticle

Uchida, Hirofumi ; Udell, Gregory F. ; Watanabe, Wako. / Are trade creditors relationship lenders?. In: Japan and the World Economy. 2013 ; Vol. 25-26. pp. 24-38.
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