The Working Capital Credit Multiplier

• 成果类型: Article
• 署名作者: Almeida, Heitor; Carvalho, Daniel; Kim, Taehyun
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; Indiana University System; Indiana University Bloomington; Chung Ang University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.13385
• 发表日期: 2024
• 页码: 4247-4302
• 关键词: firm-level evidence; Trade credit; financing constraints; INVESTMENT; channel; COSTS

摘要

We provide novel evidence that funding frictions can limit firms' short-term investments in receivables and inventories, reducing their production capacity. We propose a credit multiplier driven by these considerations and empirically isolate its importance by comparing how a similar firm responds to shocks differently when these shocks are initiated in their most profitable quarter (main quarter). We implement this test using recurring and unpredictable shocks (e.g., oil shocks) and provide extensive evidence supporting our identification strategy. Our results suggest that funding constraints and credit multiplier effects are significant for smaller firms that heavily rely on financing from suppliers.