The Determinants of Corporate Trade Credit Policies in a Bank-dominated Financial Environment: the Case of Finnish Small Firms

Abstract

"This paper examines trade credit policies of small firms operating in a bank-dominated environment (Finland). We find that creditworthiness and access to capital markets are important determinants of trade credit extended by sellers. The level of purchases is positively correlated with the level of accounts payable. Larger and older firms and firms with strong internal financing are less likely to use trade credit, whereas firms with a high ratio of current assets to total assets, and firms subject to loan restructurings use it more. Negative loan decisions by financial intermediaries increase and a close bank-borrower relationship decreases the probability that a firm does not take advantage of trade credit discounts". Copyright Blackwell Publishers Ltd, 2006.

Trade credit and bank loan in period of financial crisis: Evidence from Tunisian exporting companies

“…To focus on the simultaneous feature of trade credit and bank credit we have selected these dependent variables (Cunat, 2007;Vaidya, 2011;Yang, 2011;Niskanen & Niskanen, 2006;Bellouma, 2015):…”

The Determinants of Trade Credit Demand: An Empirical Study from Cameroonian Firms

“…Since the work of Meltzer (1960), the hypothesis of the existence of a relationship between firm size and duration of trade credit is commonly tested in the literature (Petersen and Rajan, 1997;Ono, 2001;Summers and Wilson, 2002;Delannay and Weil, 2004;Pike et al, 2005;Niskanen and Niskanen, 2006;Giannetti, Burkart and Ellingsen, 2008;Pindado and Bastos, 2009;Gibilaro and Mattarocci, 2010;Vaidya, 2011;Sivak et al, 2012). However, the researchers do not agree on the meaning of the relationship, because of the existence of interaction between the client and its supplier.…”

“…In theory, it appears that large firms have a relatively high bargaining power which results to larger payment intervals that may be due to the importance of contracts and the confidence they inspire. At the same time, external funding sources available for the companies are more numerous as its size is larger (Chant and Walker, 1988;Petersen and Rajan, 1997;Danielson and Scott, 2004;Niskanen and Niskanen, 2006). Numerous indicators have been used to measure the influence of the firm size factor in most of the empirical works on trade credit.…”

“…(2005), Garcia-Teruel and Martinez-Solano (2008), the size criterion used is the amount of turnover, while after Chant andWaker (1988), Fisman (2004), Fabbri and Klapper (2008), the firm size is measured by the number of employees. Pindado and Bastos (2009), Hyndman and Serio (2010), Atanasova (2012), Sivak et al (2012) have also caught the number of employees, Petersen and Rajan (1997), Niskanen and Niskanen (2006), Giannetti et al (2008), Ziane (2009), Gama andMateus (2010), Saito and Bandeira (2010), Deloof andVan Overfelt (2011), Vaidya (2011) have used the total assets as a measure of firm size, while Ono (2001) for example has considered the amount of equity. To control the influence of firm size, we introduced into our model a variable reflecting membership in the category of small businesses (PET: less than 50 employees) or large business (GDE: 50 or more employees).…”

“…Conversely, the arguments of the theory of pecking order theory reflects the fact that older firms have more internal financing sources and rely less on debt (Myers, 1984;Myers and Majluf, 1984).The firm's age is an approximation of capital information available to its borrowers, and thus, it influences resources availability through uncertainty reduction about the repayment capacity (Chant and Walker, 1988;Petersen and Rajan, 1997;Mateut and Mizen, 2003;Niskanen and Niskanen, 2006).…”