Abstract
AbstractTrade credit - the credit provided by suppliers to firms - can be seen as the second-best solution when financial development fails to keep pace with economic growth. This article analyses trade credit between Catalan cotton manufacturers and their clients in nineteenth-century Spain. Spanish historiography has suggested that trade credit had a detrimental effect on the profitability of the cotton firms. Based on an analysis of the archives of several firms, as well as judicial and notary sources, we present a more optimistic interpretation of the system. Manufacturers were, in fact, acting as their customers' bankers because they were in the best position to perform this function. They built up a good information structure, managed the credit risk efficiently and got positive returns from this activity.
Publisher
Cambridge University Press (CUP)
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2 articles.
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