Marc Deloof (University of Ghent and Free University of Brussels.,) Marc Jegers
Abstract
We investigate the role of trade credit as a source of financing. Using a sample of 661 large non-financial Belgian firms for the 1989-1991 period, we find that the amount of trade credit a buyer takes is determined by his need for funds and the internally available funds. Trade credit is primarily used to finance short-term assets. As such, it seems to be an important alternative not only for short-term bank debt but also for long-term financial debt, including intragroup debt. We find no evidence that the amount of trade credit taken is influenced by affiliation with the supplier. Copyright Blackwell Publishers Ltd 1999.
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