This paper investigates empirically the theoretical motivations for the use of trade credit by firms for purchases. The extent to which trade credit is used for purchases and the accounts payable to total assets ratio, i.e. the demand for trade credit, are modelled here as a function of transaction costs motivations, financing motivations, operational considerations, seller compliance issues, s...

We model the e ects on banks of the introduction of a market for credit derivatives; in particular, credit default swaps. A bank can use such swaps to temporarily transfer credit risks of their loans to others, reducing the likelihood that defaulting loans trigger the bank's nancial distress. Because credit derivatives are more exible at transferring risks than are other, more established tools...

In reality, a seller (e.g., a supplier or a manufacturer) frequently offers his/her buyers trade credit (e.g., permissible delay in payment). Trade credit reduces the buyer's holding cost of inventory and hence attracts new buyers who consider it to be a type of price reduction. On the other hand, granting trade credit also increases the seller's opportunity cost (i.e., the loss of capital oppo...

© 2012 Jessica M. Sales et al. This is an Open Access article distributed under the terms of the Creative Commons Attribution 3.0 Unported License ( http://creativecommons.org/licenses/by/3.0/), which permits distribution, public display, and publicly performance, making multiple copies, distribution of derivative works, provided the original work is properly cited. This license requires copyri...

Three types of payments confront in business dealings viz. advance, cash and credit. A payment is ubiquitously practiced, while a credit scheme escalates sales advance technique implemented to avoid cancellation orders. These are recognized as advance-cash-credit (ACC) which conventional transactions. By implicating ACC the aim determine optimal pricing ordering policies. Inventory items observ...