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COVID-19 and trade credit speed of adjustment

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  • Luo, Haowen

Abstract

This paper examines the extent to which COVID-19 affects corporate trade credit policy. We find that COVID-19 significantly accelerates US firms’ convergency speed toward the target trade credit. In addition, we find that firms subject to higher ex-ante operational risk tend to adjust trade credit toward the target faster than those with fewer risk exposures. Overall, our evidence is consistent with the risk avoidance explanation for trade credit policy changes in the presence of adverse shocks.

Suggested Citation

  • Luo, Haowen, 2022. "COVID-19 and trade credit speed of adjustment," Finance Research Letters, Elsevier, vol. 47(PA).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005043
    DOI: 10.1016/j.frl.2021.102541
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    References listed on IDEAS

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    8. Luo, Haowen, 2021. "Do firms chase trade credit target?," Finance Research Letters, Elsevier, vol. 43(C).
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    Cited by:

    1. Ping Ruan & Yung-Fu Huang & Ming-Wei Weng, 2022. "Impact of COVID-19 on Supply Chains: A Hybrid Trade Credit Policy," Mathematics, MDPI, vol. 10(8), pages 1-22, April.
    2. Ye, Yanyi & Wang, Hongping & Tian, Kailan & Li, Meng, 2024. "Supply chain risks and the cost of debt: Evidence from the COVID-19 pandemic," Research in International Business and Finance, Elsevier, vol. 70(PB).
    3. Dongmin KONG & Chen LIU & Mengxu XIONG, 2024. "COVID-19 and Firm Response: Evidence from China," Working Papers DP-2023-29, Economic Research Institute for ASEAN and East Asia (ERIA).

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