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Inflation and the Trade Credit Period

Author

Listed:
  • Moshe Ben-Horim

    (The Hebrew University of Jerusalem and the University of Florida)

  • Haim Levy

    (The Hebrew University of Jerusalem and the University of Florida)

Abstract

Management of accounts receivable and trade credit policy should often be adjusted to reflect changing interest rates due to changing inflation. Firms can respond to inflation by either increasing the discount for cash payments or by shortening the credit period. This paper investigates the policy of shortening the credit period in response to changing inflation rates. We first assume that inflation is fully anticipated, and later we extend the analysis to incorporate inflation risk.

Suggested Citation

  • Moshe Ben-Horim & Haim Levy, 1982. "Inflation and the Trade Credit Period," Management Science, INFORMS, vol. 28(6), pages 646-651, June.
    • Handle: RePEc:inm:ormnsc:v:28:y:1982:i:6:p:646-651
    DOI: 10.1287/mnsc.28.6.646
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    Citations

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    Cited by:

    1. Vandana, & Kaur, Arshinder, 2019. "Two-level trade credit with default risk in the supply chain under stochastic demand," Omega, Elsevier, vol. 88(C), pages 4-23.
    2. Rabia Bashir & Angappan Regupathi, 2022. "Determinants of Trade Credit Supply among Developing Countries during the Financial Crisis of 2008," Business and Economic Research, Macrothink Institute, vol. 12(4), pages 33-55, December.
    3. Ranveer Singh Rana & Dinesh Kumar & Kanika Prasad, 2022. "Two warehouse dispatching policies for perishable items with freshness efforts, inflationary conditions and partial backlogging," Operations Management Research, Springer, vol. 15(1), pages 28-45, June.

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