Banks provide credit to large firms either to finance large firms’ investment projects with positive net present values or to lend out SMEs indirectly through the expansion of trade credit by large firms which have Access to bank credit. The aim of the current article is twofold: to provide...

Bank firms try to improve their efficiency by offering credit to large firms which extent trade credit to those firms that are blocked from bank credit or faces high possibilities to not pay back their loans. This self-discipline helps banks to become more prudent when they lend risky firms such...