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Bank credit and trade credit after the financial crisis: evidence from rural Galicia

    David Peón   Affiliation
    ; Xulia Guntín Affiliation

Abstract

Access to external finance is a key challenge for the creation, survival and growth of SMEs. This article delves into the “weak funding” handicap of rural small firms (SEs): the access to bank financing and the substitutive role of trade credit for entrepreneurs in rural areas when they faced bank credit constraints. Considering SEs in Galicia (Spain), a paradigmatic case in Europe of rural areas in demographic decline with a strong impact of the Spanish sovereign and banking crisis of 2008–2012. There’s evidence of firms in rural areas facing a differential negative flow of bank credit during the financial crisis, especially in the manufacturing and construction sectors, that dissipated afterwards. Then, using a panel data approach that considers the determinants of trade credit, the complementary and substitutive hypotheses are tested to estimate the impact of bank credit restrictions over trade credit.

Keyword : trade credit, bank credit constraints, rural development, SME, SE, entrepreneur

How to Cite
Peón, D., & Guntín, X. (2021). Bank credit and trade credit after the financial crisis: evidence from rural Galicia. Journal of Business Economics and Management, 22(3), 616-635. https://doi.org/10.3846/jbem.2021.14270
Published in Issue
Mar 19, 2021
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This work is licensed under a Creative Commons Attribution 4.0 International License.

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