Effect of Credit Rating on Trade Credit: Empirical Evidences from Pakistani Non-financial sector

Kashif, Muhammad; Ahmed, Jaleel; Islam, Mubashar; Gillani, Umar Farooq

doi:10.30537/sijmb.v6i1.119

Cited by 2 publications

(2 citation statements)

References 13 publications

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“…Non-financial firms that have more access to the capital markets and financial institutions can easily arrange their funds to support their financing activities. These results align with previous trade credit research (Kashif et al, 2019). The objective of an expansionary monetary policy is to channel funds towards the economy (Cecchetti, 2000).…”

Section: Panel Unit Root Testsupporting

confidence: 90%

Increase in Money Supply Amplifies the Secondary Sources of Finance: Evidence from Pakistani Non-Financial Firms

Kashif,

Awan,

Hanif

et al. 2023

J. educ. soc. stud.

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An increase in money supply is a signal to expand the financing system in the economy; thus, non-financial firms with access to capital markets and financial institutions stand by side and play a significant role in this situation. This study aims to investigate the impact of money supply increases on the capacity of secondary sources of financing and to achieve the goals of expansionary monetary policy. In 2011, 399 non-financial firms were listed on the Pakistan Stock Exchange, after excluding those firms that did not provide complete information between our selected periods excluded from the sample. Data from 156 non-financial firms were finally used for analysis. Panel data have been collected from the non-financial firms of Pakistan. After applying the Fixed Effects Model, the results provide evidence that an increase in the money supply in the economy of Pakistan would lead to an enhancement in the financing channels, like trade credit. This study explores the relationship between monetary policy adopted by the central bank and the use of trade credit. Collectively, the results also favor positive relationships between access to the capital market and trade credit patterns. This study recommends that during the time of monetary expansion, firms with better access to financial institutions were more willing to enhance credit sales. For future research, it suggests comparing the use of trade credit during the tight and expansionary monetary policy.

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Section: Panel Unit Root Testsupporting

confidence: 90%

Increase in Money Supply Amplifies the Secondary Sources of Finance: Evidence from Pakistani Non-Financial Firms

Kashif,

Awan,

Hanif

et al. 2023

J. educ. soc. stud.

View full text Add to dashboard Cite

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“…Despite the changing conditions in trade, there is always a huge demand for trade credit schemes, which remain a profitable business (Shah et al, 2018). Buyers can benefit from trade credits, which has engendered a multitude of business strategies that are successfully implemented all over the world (Kashif et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

Influence of shareholder equity on trade credit demand: The study of non-financial firms in Pakistan

Shah

Liu

Shah

et al. 2021

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Relevance. Most small-sized firms have little or no access to credit markets, which is why they prefer equity financing and usually pay higher dividends on this equity. When paying higher dividends, these small-sized debt-free firms continue to build a reputation in the markets. Research objective. The analysis focuses on the trade payables that impact shareholder equity. In Pakistan, most of the businesses are small and middle-sized. Most of the Pakistani SMEs have a low capital structure and these enterprises depend on their daily business needs, so equity financing is their primary source of funding. Data and Methods. The data source for our study is the financial statements of non-financial firms (in total, 156 firms) from the balance Sheet Analysis (BSA) and the Financial Statement Analysis (FSA) published by The State Bank of Pakistan (SBP). The financial statements also provide the data listed by the Pakistan Stock Exchange (PSX). The data cover the period from 2001 to 2017. This study primarily relies on the panel data model. The study applied the methods of descriptive analysis, correlation matrix, common regression model, fixed effect model, random effect model and then the Hausman test was performed to choose the best model. Results. The results of the study indicate a positive and significant relationship between shareholder equity and trade credit demand. Conclusion. Many investors require trade credit as a suitable tool for the growth of shareholders of the company. It is also used in many types of business schemes as the shareholder equity factor plays a role in profit generation through the use of trade credit transactions.

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Effect of Credit Rating on Trade Credit: Empirical Evidences from Pakistani Non-financial sector

Cited by 2 publications

References 13 publications

Increase in Money Supply Amplifies the Secondary Sources of Finance: Evidence from Pakistani Non-Financial Firms

Increase in Money Supply Amplifies the Secondary Sources of Finance: Evidence from Pakistani Non-Financial Firms

Influence of shareholder equity on trade credit demand: The study of non-financial firms in Pakistan

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