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

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  • Jyrki Niskanen
  • Mervi Niskanen
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    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.

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    Bibliographic Info

    Article provided by European Financial Management Association in its journal European Financial Management.

    Volume (Year): 12 (2006)
    Issue (Month): 1 ()
    Pages: 81-102

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    Handle: RePEc:bla:eufman:v:12:y:2006:i:1:p:81-102

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    Cited by:
    1. Martin Boyer & Karine Gobert, 2007. "The Impact of Switching Costs on Vendor Financing," Cahiers de recherche 07-18, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
    2. Di Giuli, Alberta & Caselli, Stefano & Gatti, Stefano, 2011. "Are small family firms financially sophisticated?," Journal of Banking & Finance, Elsevier, vol. 35(11), pages 2931-2944, November.
    3. Thapa, Priya Darshini Pun, 2013. "How does profitability get affected by working capital management in food and beverages industry?," MPRA Paper 50926, University Library of Munich, Germany.
    4. Cristina Martínez-Sola & Pedro García-Teruel & Pedro Martínez-Solano, 2014. "Trade credit and SME profitability," Small Business Economics, Springer, vol. 42(3), pages 561-577, March.
    5. Naeem Ul Hassan & Malik Muhammad Imran & Muhammad Amjad & Mehboob Hussain, 2014. "Effects of Working Capital Management on Firm Performance: An Empirical Study of Non-financial listed Firms in Pakistan," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(6), pages 114-132, June.
    6. Nakhoda, Aadil, 2012. "The influence of financial leverage of firms on their international trading activities," MPRA Paper 35765, University Library of Munich, Germany.

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