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Short-term financing structure and trade credit dynamics in an emerging market: a nonlinear perspective

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  • Phan Tran Minh Hung
  • Thi Kim Nguyen
  • Nguyen Thanh Phuc
  • Vo Hoang Diem Trinh

Abstract

This study examines the impact of short-term debt on firms' trade credit payables decisions. Using the system generalised method of moments (SGMM) estimator, we test the proposed research framework on a panel dataset of firms listed on the Vietnamese stock exchange over the period 2007-2024. The results reveal a nonlinear, inverted U-shaped relationship between short-term debt and trade credit payables, indicating that trade credit payables are positively associated with short-term debt at low debt levels but negatively associated at high debt levels. This pattern is also confirmed by using a different measure of trade credit payables, an alternative econometric approach, and the subsample to assess the impact of the global financial crisis. These results are consistent with the theoretical predictions of complementarity and substitution effects, suggesting that the complementarity effect dominates at low levels of short-term debt, whereas the substitution effect becomes more pronounced as short-term debt increases.

Suggested Citation

  • Phan Tran Minh Hung & Thi Kim Nguyen & Nguyen Thanh Phuc & Vo Hoang Diem Trinh, 2026. "Short-term financing structure and trade credit dynamics in an emerging market: a nonlinear perspective," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 30(5), pages 1-23.
    • Handle: RePEc:ids:ijecbr:v:30:y:2026:i:5:p:1-23
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