Financing production with liquidity constraints: the role of trade credit in agro-food supply chains
No hay miniatura disponible
Fecha
Autores
Título de la revista
ISSN de la revista
Título del volumen
Editor
Resumen
Descripción
This paper focuses on the role of trade
credit in agri-food supply chains, with particular reference to a context of financial turmoil and credit rationing. Trade credit enhances the resilience of firms to liquidity shocks and creates systemic risk.
These features of trade credit are investigated with the aim of pinning down their effects on the financing of working capital investments of liquidity-constrained firms. To this end, we put forward a simple
model of trade credit connections in supply chains and use the model to measure the degree of exposure of these investment decisions to unexpected liquidity
constraints arising from liquidity risk and systemic risk. We do so by characterising the impact of an exogenous liquidity shock on the investment and output of firms in agri-food supply chains in terms of threshold values of such a shock.