working papers are produced by the Bradford University School of Management and are to be circulated for discussion purposes only. Their contents should be considered to be preliminary. The papers are expected to be published in due course, in a revised form and should not be quoted without the author's permission. The literature offers numerous motives for extending trade credit. A major econo...

We examine a novel but economically important characterization of trade credit relationships in which smaller, often credit constrained, suppliers provide financing for their larger investmentgrade buyers. Using variation in large retailers’ cash management policies to instrument for how quickly individual vendors are paid, we show that firms are forced to cut back on investment in new plants a...

Despite the inherent risk arising from separating buyers and sellers, networked online marketplaces are proliferating. We describe how online auction marketplaces take advantage of institutional structures to build buyer trust in auction sellers, mitigate risk, increase satisfaction, and promote transaction intentions. It is hypothesized, based on institutional trust (Zucker 1986), that buyer t...

Interfirm late payments are a hot issue in the EU, as witnessed by the 1998 bills passed in Italy and in the U.K. and by the soon to be approved EU Directive. Comprehensive information, especially on the effective own cost, is however almost absent in the literature. The paper provides the first detailed evidence of the trade debt own cost for the Italian manufacturing firms, arising out of dis...

This paper analyses the effects of borrower-specific credit constraints on macroeconomic outcomes in an agent-based housing market model, calibrated using UK household survey data. We apply different Loan-to-Value (LTV) caps for types agents: first-time buyers, second and subsequent buy-to-let investors. then analyse debt, wealth inequality consumption volatility. The households’ function, inco...

We study the terms of credit in a competitive market in which sellers (lenders) are willing to repeatedly …nance the purchases of buyers (borrowers) by engaging in a credit relationship. The key frictions are: (i) the lender is unable to observe the borrower’s ability to repay a loan; (ii) the borrower cannot commit to any long-term contract; (iii) it is costly for the lender to contact a borro...

This paper has two related goals: (i) construct a model where money and credit coexist; (ii) pursue in this setting a theory of endogenous sticky prices that can be taken to the data. Search frictions generate price dispersion, and lead to monetary equilibria where profit-maximizing sellers set nominal prices they sometimes keep fixed when aggregate conditions change. Buyers can use cash or cre...

In this paper, we establish an economic production quantity model for a manufacturer (or wholesaler) with defective items when its supplier offers an up-stream trade credit M while it in turn provides its buyers (or retailers) a down-stream trade credit N. The proposed model is in a general framework that includes numerous previous models as special cases. In contrast to the traditional differe...

Historically black colleges and universities (HBCUs) pay more in underwriting fees to issue tax-exempt bonds, compared to similar, non-HBCU schools. This appears to reflect higher deadweight costs of findings willing buyers: the effect is three times larger in the Deep South, where racial animus has historically been the highest. School attributes or credit quality explain almost none of the ef...

This paper considers a search theoretic model of money in the tradition of Lagos and Wright (2005) where sellers can choose to produce in the formal or informal market. There is continuum of types of producers that differ in their managerial ability, as in Lucas span of control model. Producers in the formal market can make deposits and receive intererst payments, which makes credit possible fo...