Three essays on firm investment, trade credit, and exports

Resumen

Essay I: Bank market power and short term and long term firm investment. This paper investigates the effects of bank market power on firm credit availability, and therefore on firm investment considering the short and the long term. Our results suggest that an increase in bank market power reduce the firm investment on the short term, but on the long term firm investment tends to recovery. We extend the analysis by performing Granger causality test, and we find that bank market power influences on firm investment, but not the opposite side. Finally, we also show that cash flow is sensitive to bank market power for small and medium enterprises. Essay II: Firm exports, liquidity management, and financial constraints. This paper investigates the relationship between firm financial constraints, working capital finance and export activities. Our results suggest that financial constraints constitute an obstacle for firms to become in exporters, and even could reduce the percentage of foreign sales. We also find that an increase in cash conversion cycle, as well as net trade cycle, raises the probability of being an exporter, as well as the volume of foreign sales. Moreover, we find that an increase in collection and inventory period increases firm export activity, whilst by contrast, an increase in credit period reduces it. Essay III: Monetary policy, implicit interest rate, and relative net trade credit. This paper investigates the effects of monetary policy on the implicit interest rate of trade credit as well as the probability the firm becomes net trade borrower. We also construct the implicit interest rate as the difference between creditors and debtors over the sum of both. Our results show that a tightening in monetary policy leads to: (i) increase interest rate of trade credit, (ii) become firms in trade borrowers, (iii) generate divergence in the cost of trade credit among firms of the same industry sector, and (iv) create a complementarity effect in prices between trade and bank financing.