The Determinants of Trade Credit: Evidence from Indian Manufacturing Firms

HTML  Download Download as PDF (Size: 127KB)  PP. 707-716  
DOI: 10.4236/me.2011.25079    7,137 Downloads   13,027 Views  Citations
Author(s)

Affiliation(s)

.

ABSTRACT

Trade credit (accounts receivable and accounts payable) is both an important source and use of funds for manufacturing firms in India. This paper empirically investigates the determinants of trade credit in the Indian context. The empirical evidence presented suggests that strong evidence exists in support of an inventory management motive for the existence of trade credit. Highly profitable firms both give and receive less trade credit. Firms with greater access to bank credit offer less trade credit to their customers. On the other hand, firms with higher bank loans receive more trade credit. Holdings of liquid assets have a positive influence on both accounts receivable and accounts payable.

Share and Cite:

R. Vaidya, "The Determinants of Trade Credit: Evidence from Indian Manufacturing Firms," Modern Economy, Vol. 2 No. 5, 2011, pp. 707-716. doi: 10.4236/me.2011.25079.

Copyright © 2024 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.