Trade credit, earthquakes, and firm resilience: Lessons from three earthquakes in the 21st century

This study examines how firms adjust their trade credit policies after major earthquakes in Chile (2010), Italy (2016), and Türkiye (2023). Using an event study and difference-in-differences approach, it distinguishes resilient (positive abnormal returns) from vulnerable (negative abnormal returns) firms. Results show that resilient firms typically reduced both receivables and payables, signaling liquidity preservation and tighter credit standards. In contrast, vulnerable firms extended more credit and delayed payments, reflecting stress and limited financing. Effects are strongest among manufacturing firms. Findings highlight trade credit’s dual role as a liquidity buffer and a strategic tool for resilience in post-disaster recovery and climate-related risk management.