Trade Credit, Bank Credit and Crisis: Some Empirical Evidence for India?

Employing data on an extended sample of manufacturing firms during 1993-2012, the article studies the inter-linkage between trade credit and bank credit and how it evolved during the crisis. Accordingly, we first discuss the relevance of a trade-credit channel in India and subsequently, explore the interplay between these two financing forms. The analysis provides some evidence in favour of a trade-credit channel in India. More importantly, the findings indicate that bank credit and trade credit are complementary, although there was a differential impact on accounts payable (demand) and accounts receivables (supply) during the crisis.