Trade Credit and Risk Management

Chapter 4

Risk Mitigation of Trade Credit and Distress along the Supply Chain

An Empirical Analysis for the U.S. Market

Introduction

The previous chapters have placed great emphasis on the credit risk mitigating role of trade credits from the perspective of financiers. Nonetheless, trade credits originate from business relationships and, more recently, a distinct role in coordinating supply chains has been identified for trade credit. The impact on the other members is influenced by counterparty exposure, the structure of the industry in which the supply chain interactions take place, and the type of sector. Notwithstanding the relevance of the topic, little is known about the features of interfirm networks in the propagation and redistribution ...