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The Determinants of Trade Credit: Evidence from Nigeria

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  • Ojenike J.O
  • O. Olowoniyi

Abstract

Trade credit is an important component of corporate finance in many countries. This paper empirically investigates the determinants of trade credit in the Nigerian context. The empirical evidence presented suggests that the affect of institutional loans on demand for trade credit is much stronger indicating that firms are credit constrained and hence switch to trade credit financing. The econometric analysis showed that high level of operating income, retained earnings, depreciation provision gives the firms a strong leverage hence would not switch on to trade credit financing.

Suggested Citation

  • Ojenike J.O & O. Olowoniyi, 2014. "The Determinants of Trade Credit: Evidence from Nigeria," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 3(4), pages 1-2.
    • Handle: RePEc:spt:fininv:v:3:y:2014:i:4:f:3_4_2
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    Cited by:

    1. Lo Nigro, Giovanna & Favara, Giovanni & Abbate, Lorenzo, 2021. "Supply chain finance: The role of credit rating and retailer effort on optimal contracts," International Journal of Production Economics, Elsevier, vol. 240(C).
    2. Michael Machokoto & Daniel Gyimah & Boulis Maher Ibrahim, 2022. "The evolution of trade credit: new evidence from developed versus developing countries," Review of Quantitative Finance and Accounting, Springer, vol. 59(3), pages 857-912, October.

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