This paper analyzes the financing terms that support international trade and sheds light on how these terms shape the impact of economic shocks on trade. Analysis of transaction-level data from a U.S.-based exporter of frozen and refrigerated food products, primarily poultry, reveals broad patterns about the use of alternative financing terms. These patterns help discipline a model in which the...

It is typically less profitable for an opportunistic borrower to divert inputs than to divert cash. Therefore, suppliers may lend more liberally than banks. This simple argument is at the core of our contract theoretic model of trade credit in competitive markets. The model implies that trade credit and bank credit can be either complements or substitutes. Among other things, the model explains...

Small and medium enterprises' financing constraints are an important reason for its development in recent years, national policy and legal aspects are also efforts to promote the development of SMEs, the SME financing is still a lot of the biggest obstacles to entrepreneurs. In this paper, the status of financing small and medium enterprises start to analyze the reasons for its financing of the...

In this note, we show on a stylised example how one can hedge Basket Credit Derivatives using a related family of liquid hedging products. Using simple Non-Arbitrage arguments and results from stochastic calculus, we prove that one can build a self-financing portfolio written on Credit Default Swaps which replicates the payoff of a general Credit Derivative.

Supply chain finance plays a significant role in alleviating capital shortage, which optimizes supply performance. In this paper, we discuss the interaction of credit financing and channel encroachment dual-channel structure consisting supplier retailer. Under Stackelberg structure, observe between is heavily dependent on substitution degree, potential online market, production cost. Intuitivel...

The accelerating accumulation and risk concentration of Chinese local financing platforms debts have attracted wide attention throughout the world. Due to the network of financial exposures among institutions, the failure of several platforms or regions of systemic importance will probably trigger systemic risk and destabilize the financial system. However, the complex network of credit relatio...

We study the effects of firm’s credit condition on (1) labor market performance and (2) the inflation and unemployment relationship, in a new monetarist model. Better credit condition has positive impact on labor market as firms save on financing cost, improve profitability, and thus create more vacancies. Inflation increases the financing cost and thus discourages job creation. On the other ha...