DETERMINANTS OF TRADE CREDIT SUPPLY FOR THE LISTED NON-FINANCIAL FIRMS OF PAKISTAN
Keywords:
Trade Credit Supply, Short Term Bank Financing, Credit Rating, Non-Financial Sector
Abstract
Firms generally prefer to sell goods on cash than on credit, but the competitive environment compels them to offer credit to most of their customers. Although non-financial firms have better access to the financial channel, they still rely on trade credit to increase the market share. This research aims to find out the determinants of Pakistani listed non-financial companies’ Trade Credit Supply. The data was collected from 2014 to 2019 for 162 non-financial firms. By using fixed-effect panel estimation the study found that the variables such as firm size, credit rating, and, short term bank financing are significant determinants of trade credit supply. Whereas, profitability is found to be an insignificant determinant of trade credit supply. The study recommends policymakers to develop and encourage the trade credit channels to enhance and promote the trade credit in the economy and build trust and better customer relationships by discouraging the conventional mechanism.References
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Abuhommous, A. A. A. (2017). The Impact of Offering Trade Credit on Firms’ Profitability. Journal of Corporate Accounting & Finance,28(6), 29–40. https://doi.org/10.1002/jcaf.22298
Agostino, M., & Trivieri, F. (2014). Does trade credit play a signalling role? Some evidence from SMEs microdata. Small Business Economics,42(1), 131–151. https://doi.org/10.1007/s11187-013-9478-8
Ahmed, J., & Hui, X. (2016). Investigation of Trade Credit Patterns in Effect with Bank Loan Availability. DES tech Transactions on Social Science, Education and Human Science, 0(seme), Articleseme. https://doi.org/10.12783/dtssehs/seme2016/5462
Ahmed, J., Hui, X., & Khalid, J. (2014). Determinants of Trade Credit: The Case of a Developing Economy. European Researcher, 83,1694–1706. https://doi.org/10.13187/er.2014.83.1694
Banos
Abuhommous, A. A. A. (2017). The Impact of Offering Trade Credit on Firms’ Profitability. Journal of Corporate Accounting & Finance,28(6), 29–40. https://doi.org/10.1002/jcaf.22298
Agostino, M., & Trivieri, F. (2014). Does trade credit play a signalling role? Some evidence from SMEs microdata. Small Business Economics,42(1), 131–151. https://doi.org/10.1007/s11187-013-9478-8
Ahmed, J., & Hui, X. (2016). Investigation of Trade Credit Patterns in Effect with Bank Loan Availability. DES tech Transactions on Social Science, Education and Human Science, 0(seme), Articleseme. https://doi.org/10.12783/dtssehs/seme2016/5462
Ahmed, J., Hui, X., & Khalid, J. (2014). Determinants of Trade Credit: The Case of a Developing Economy. European Researcher, 83,1694–1706. https://doi.org/10.13187/er.2014.83.1694
Banos
Published
2020-07-01
Section
Articles
