At present, there is no consensus in the literature concerning the influence of different credit financing on investment efficiency of enterprises, especially the lack of empirical evidence in developing countries. In this paper, based on the World Bank enterprise survey data, using the Heckman sample selection model, we study the effects of bank credit and trade credit on investment efficiency...

The aim of this paper is to analyse the role of trade credit in the financing of French small and medium-sized enterprises (SMEs) using specific data collected in a recent survey on small firms. We provide direct evidence that inter-firm credit offered by SMEs is sensitive to the strategic importance of firm size and position. Using existing theories, we also test a supply function and a model ...

As an integrated part of a supply contract, trade credit has intrinsic connections with supply chain contracting and inventory management. Using a stylized model that explicitly captures the interaction of firms’ operations decisions and financial risks, this paper attempts to develop a deeper understanding of trade credit from an operational perspective. Revolving around the question of what r...

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...

This paper studies supply chain financing. We investigate why a firm extends trade credit to its customers and how this decision relates to its own financing. We use a novel firm-level database of Chinese firms with unique information on market power in both output and input markets and on the amount, terms, and payment history of trade credit simultaneously extended to customers (accounts rece...

this paper investigates an epq model with the increasing demand and demand dependent production rate involving the trade credit financing policy, which is seldom reported in the literatures. the model considers the manufacturer was offered by the supplier a delayed payment time. it is assumed that the demand is a linear increasing function of the time and the production rate is proportional to ...

Trade credit financing has become a powerful tool to improve sales & profit in an industry. In general, a supplier/retailer frequently offers trade credit to its credit risk downstream member in order to stimulate their respective sales. This trade credit may either be full or partial depending upon the past profile of the downstream member. Partial trade credit may be offered by the supplier/r...

We study how the availability of domestic credit influences the contribution that financing activities make to a firm’s return on equity (ROE). Using a sample of 51,866 firms from 69 countries, we find that financing activities contribute more to a firm’s ROE in countries with higher domestic credit. The higher contribution of financing activities is not driven by firms taking greater leverage ...

This paper explores a financial role of Japanese general trading companies (GTCs), which act as a central point in a distribution network among group firms. I examine Meltzer’s conjecture, which holds that financially strong companies like GTCs increase trade receivables and reduce trade payables to shield their trading partners from a monetary squeeze. First, I investigate the trade credit gra...

Financial trade credit theories argue that suppliers have an advantage over other lenders in financing credit-constrained firms. While the reasons for this advantage differ across theories, they are usually related either to product characteristics or to market structure. We exploit this insight to analyze trade credit volume and contract terms. Ceteris paribus, service suppliers offer as much ...