Medium-sized Enterprises (MEs) contribute greatly to value added and employment in the UE and they are also key to pursuing sustainable green economic growth. Since trade credit is a crucial financial source for SMEs, this article investigates the importance of trade credit for Italian MEs, and particularly for ‘green’ MEs, rather than ‘non-green’ MEs. A panel analysis is applied to 101,250 observations over the period 2010–2019. We find that green MEs rely more on trade credit than non-green MEs. Moreover, trade credit is more important for younger, smaller, less profitable, and less liquid MEs. We further show that a substitution effect between trade and banking credit exists, and that the local development level affects the demand for trade credit. Our results demonstrate that trade credit supports sustainable development more than banking credit. Financial intermediaries should therefore include green parameters in the assessment of the creditworthiness of MEs, and policymakers should consider that trade credit and financial inclusion may be important in pursuing sustainable local development and economic growth.

Is Trade Credit a Sustainable Resource for Medium-Sized Italian Green Companies? / Pisani, Raoul; Arcuri, Maria Cristina. - In: SUSTAINABILITY. - ISSN 2071-1050. - ELETTRONICO. - 2021 Vol. 13, Issue 5:(2021), pp. 1-19. [https://doi.org/10.3390/su13052872]

Is Trade Credit a Sustainable Resource for Medium-Sized Italian Green Companies?

Pisani, Raoul;
2021-01-01

Abstract

Medium-sized Enterprises (MEs) contribute greatly to value added and employment in the UE and they are also key to pursuing sustainable green economic growth. Since trade credit is a crucial financial source for SMEs, this article investigates the importance of trade credit for Italian MEs, and particularly for ‘green’ MEs, rather than ‘non-green’ MEs. A panel analysis is applied to 101,250 observations over the period 2010–2019. We find that green MEs rely more on trade credit than non-green MEs. Moreover, trade credit is more important for younger, smaller, less profitable, and less liquid MEs. We further show that a substitution effect between trade and banking credit exists, and that the local development level affects the demand for trade credit. Our results demonstrate that trade credit supports sustainable development more than banking credit. Financial intermediaries should therefore include green parameters in the assessment of the creditworthiness of MEs, and policymakers should consider that trade credit and financial inclusion may be important in pursuing sustainable local development and economic growth.
2021
Pisani, Raoul; Arcuri, Maria Cristina
Is Trade Credit a Sustainable Resource for Medium-Sized Italian Green Companies? / Pisani, Raoul; Arcuri, Maria Cristina. - In: SUSTAINABILITY. - ISSN 2071-1050. - ELETTRONICO. - 2021 Vol. 13, Issue 5:(2021), pp. 1-19. [https://doi.org/10.3390/su13052872]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11572/314478
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