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The Determinants of Trade Credit in Transition Countries

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  • Anne-France Delannay
  • Laurent Weill

Abstract

The paper investigates the determinants of trade credit in transition countries. Traditional theories of trade credit extension suggest that both financial and commercial motives may induce non-financial companies to assume a role of financial intermediation. Furthermore, specific conditions of financing for companies in transition countries may reserve to trade credit an important role in financial structure. We test the determinants of accounts receivable and accounts payable on a sample of about 9300 companies from nine Central and Eastern European Countries. Results suggest that both financial and commercial motives explain the credit behaviour of firms. However, we do not find generalised patterns in the use of trade credit among all transition countries. Copyright Springer 2005

Suggested Citation

  • Anne-France Delannay & Laurent Weill, 2005. "The Determinants of Trade Credit in Transition Countries," Economic Change and Restructuring, Springer, vol. 37(3), pages 173-193, September.
    • Handle: RePEc:kap:ecopln:v:37:y:2005:i:3:p:173-193
    DOI: 10.1007/s10644-005-5062-9
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    1. Giuseppe Marotta, 2001. "Is trade credit more expensive than bank loans? Evidence from Italian firm-level data," Heterogeneity and monetary policy 0103, Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica.
    2. Andrzej Bratkowski & Irena Grosfeld & Jacek Rostowski, 2000. "Investment and Finance in de novo private firms: Empirical Results from the Czech Republic, Hungary and Poland," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(1), pages 101-116, March.
    3. Pissarides, Francesca & Singer, Miroslav & Svejnar, Jan, 2003. "Objectives and constraints of entrepreneurs: evidence from small and medium size enterprises in Russia and Bulgaria," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 503-531, September.
    4. Andrzej Bratkowski & Irena Grosfeld & Jacek Rostowski, 2000. "Investment and Finance in de novo private firms: Empirical Results from the Czech Republic, Hungary and Poland," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(1), pages 101-116, March.
    5. Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2001. "Firms as financial intermediaries - evidence from trade credit data," Policy Research Working Paper Series 2696, The World Bank.
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    1. repec:zbw:bofitp:2009_007 is not listed on IDEAS
    2. Couppey-Soubeyran Jézabel & Héricourt Jérôme, 2013. "The Impact of Financial Development on the Relationship between Trade Credit, Bank Credit, and Firm Characteristics: A Study on Firm-Level Data from Six MENA Countries," Review of Middle East Economics and Finance, De Gruyter, vol. 9(2), pages 197-239, August.
    3. Nicoleta Barbuta-Misu & Fitim Deari, 2016. "Determinants of Trade Credit: A Preliminary Analysis on Construction Sector," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 306-314.
    4. Zuzana Fungacova & Christophe J. GODLEWSKI & Laurent Weill, 2009. "Asymmetric Information and Loan Spreads in Russia: Evidence from Syndicated Loans," Working Papers of LaRGE Research Center 2009-01, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    5. repec:bas:econth:y:2012:i:6:p:47-64 is not listed on IDEAS
    6. Grzegorz Zimon & Robert Dankiewicz, 2020. "Trade Credit Management Strategies in SMEs and the COVID-19 Pandemic—A Case of Poland," Sustainability, MDPI, vol. 12(15), pages 1-16, July.
    7. Nisar Ahmad & Talat Afza & Bilal Nafees, 2017. "Determinants of Trade Credit Extended by Manufacturing Firms Listed in Pakistan," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 9(4), pages 287-314, December.
    8. repec:bas:econth:y:2012:i:6:p:26-46 is not listed on IDEAS
    9. Carlos Carreira & Pedro Silva, 2023. "The Determinants of Trade Credit During and After the 2008 International Financial Crisis," Notas Económicas, Faculty of Economics, University of Coimbra, issue 56, pages 90-110, July.
    10. Sandra M. Leitner & Robert Stehrer, 2015. "What Determines SMEs’ Funding Obstacles to Bank Loans and Trade Credits?," wiiw Working Papers 114, The Vienna Institute for International Economic Studies, wiiw.
    11. Ketskeméty, László & Pálinkó, Éva & Szabó, Márta, 2010. "Kereskedelmi hitelt alakító paraméterek a magyarországi feldolgozóipari vállalatok körében [Parameters for commercial credit among Hungary's manufacturing companies]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 994-1012.
    12. James, Hui Liang & Ngo, Thanh & Wang, Hongxia, 2023. "The impact of more able managers on corporate trade credit," Journal of Behavioral and Experimental Finance, Elsevier, vol. 40(C).
    13. Cengizhan Karaca, 2023. "Dynamics of Trade Credit, Bank Credit Extension, Sustainable Economic Growth, and Imports: Evidence from the European Non-Financial Sector," Sustainability, MDPI, vol. 15(17), pages 1-24, August.
    14. Bărbuţă-Mişu Nicoleta & Deari Fitim, 2016. "Determinants of Trade Credit in European Construction Firms: A Preliminary Study," Ekonomika (Economics), Sciendo, vol. 95(2), pages 139-157, February.
    15. Anna Białek-Jaworska & Natalia Nehrebecka, 2015. "Rola kredytu handlowego w finansowaniu przedsiębiorstw," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5, pages 33-64.
    16. Bastos, Rafael & Pindado, Julio, 2013. "Trade credit during a financial crisis: A panel data analysis," Journal of Business Research, Elsevier, vol. 66(5), pages 614-620.
    17. Mara Madaleno & Nicoleta Bărbuţă-Mişu & Fitim Deari, 2019. "Determinants of Net Trade Credit: A Panel VAR Approach Based on Industry," Prague Economic Papers, Prague University of Economics and Business, vol. 2019(3), pages 330-347.
    18. Duliniec Aleksandra & Świda Natalia, 2021. "Factors influencing the use of trade credit in financing Polish listed companies," Economics and Business Review, Sciendo, vol. 7(1), pages 113-134, March.
    19. Natalia Nehrebecka & Aneta Dzik-Walczak, 2016. "Publication selection bias in the sources of financing the enterprises research? A Meta-Regression Analysis," Working Papers 2016-02, Faculty of Economic Sciences, University of Warsaw.
    20. Hongkang Xu & Jia Wu & Mai Dao, 2020. "Corporate social responsibility and trade credit," Review of Quantitative Finance and Accounting, Springer, vol. 54(4), pages 1389-1416, May.
    21. repec:prg:jnlpep:v:preprint:id:696:p:1-18 is not listed on IDEAS
    22. B. Singh Gill, 2012. "Is accounts-receivable industry-specific or firm-specific?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/784, Ghent University, Faculty of Economics and Business Administration.

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    More about this item

    Keywords

    trade credit; transition economies; G32; P34;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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