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Predictors Of Net Trade Credit Exposure: Evidence From The Italian Market

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  • Lucia Gibilaro
  • Gianluca Mattarocci

Abstract

In light of multiple motivations for the use of trade credit, firms tend to supply and receive trade credit at the same time, so the choice to engage in one of these activities could influence the other. Many studies proposed in the literature define models of trade credit and provide empirical evidence, looking mainly at only one aspect of trade policy at a time. The few studies comparing gross and net exposure models are based on a limited set of variables or on a limited time horizon. In the context of one of the more relevant world markets (Italy), this paper compares models for gross and net exposure, demonstrating a significant difference in the statistical fitness of the two models and in the characteristics of the explanatory variables. The results demonstrate the existence of a strict relationship between trade credit and debt choices and suggest some unique features of net models compared to gross ones.

Suggested Citation

  • Lucia Gibilaro & Gianluca Mattarocci, 2010. "Predictors Of Net Trade Credit Exposure: Evidence From The Italian Market," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 4(4), pages 103-119.
    • Handle: RePEc:ibf:ijbfre:v:4:y:2010:i:4:p:103-119
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    More about this item

    Keywords

    trade credit; Italy;

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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