“…Suppliers can finance a firm’s resources by extending trade credit (Petersen and Rajan, 1997) or, in other words, customers can delay payment to suppliers in order to finance their operations (Cao et al , 2018). Although trade credit is a more expensive form of finance than bank loans (Guariglia and Mateut, 2006; Yang, 2011; Lin and Chou, 2015; Afrifa et al , 2018), many firms around the globe use trade credit as their main source of finance, which begs the question as to why firms prefer this source. To answer this, a number of theories, namely financing advantage theory, transaction cost theory, as well as signalling and information asymmetry theory, have been used in prior literature to explain the usage of trade credit.…”