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Effect of Trade Credit and Credit Policy on the Performance of Building Industry in Nigeria

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Abstract

Building industries play an important role in the economy and the activities of the industry are also vital to the achievement of national socio-economic development goals of providing shelter, infrastructure, and employment. The industry could be enhanced with the opportunity to trade credit and a proper credit policy. When this is not the case, it is expected that the industries would not perform optimally. It is in this regard that this study focused on the effect of trade credit and credit policy on performance of building industry in Nigeria. Ex-post facto research design was adopted. The study populations are the 32 building industries in Nigeria. Data was collected from audited annual reports and accounts of the companies listed in building industry at the Nigeria Stock Exchange. Data collected was analyzed using descriptive and inferential statistics. Findings revealed that trade credit had significant influence on performance of building industry in Nigeria (Adj. R2 = 0.138; p = 0.000), credit policy was found to be significantly effective on performance of building industry in Nigeria (Adj. R2 = 0.100; p = 0.000). Jointly, trade credit and credit policy were found to affect performance of building industry statistically significantly in Nigeria (Adj. = 0.106, p = 0.000). Based on the above findings, this study concludes that only trade credit and credit policy both have significant and positive effect on performance of building industry in Nigeria. The study therefore recommended that managements of the building industries in Nigeria should improve their credit policy and also their performance so as to have access to more trade credit.

Suggested Citation

  • Joshua Adewale, ADEJUWON & Azeezat Atinuke, OLADIMEJI, & Adefisayo Oluwakemi, ADEJUWON, 2023. "Effect of Trade Credit and Credit Policy on the Performance of Building Industry in Nigeria," Multidisciplinary Journal of Social Sciences, Association of Forensic Accounting Researchers (AFAR), vol. 3(1), pages 21-47, June.
    • Handle: RePEc:ris:amjoss:0002
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    References listed on IDEAS

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    1. Prince C. Nwakanma & Ikechukwu S. Nnamdi & Godfrey O. Omojefe, 2014. "Bank Credits to the Private Sector: Potency and Relevance in Nigeria’s Economic Growth Process," Accounting and Finance Research, Sciedu Press, vol. 3(2), pages 1-23, May.
    2. Duong Phuong Thao Pham & Thi Cam Ha Huynh, 2020. "The Impact of Trade Credit Investment on Manufacturing Firms' Profitability: Evidence from Vietnam," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 68(4), pages 775-796.
    3. Wang, Ling, 2022. "The dynamics of money supply determination under asset purchase programs: A market-based versus a bank-based financial system," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 79(C).
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