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Relationship Between Corporate Development And Short-Term Credit Dynamics

Author

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  • MILITARU, Iuliana

    (Romanian-American University, Bucharest, Romania)

Abstract

It is an established fact all firms need, for achieving long-term development, long-term financing sources – most important being, among them, retentions and bank loans; but, long-term development is definitely not possible if the firms‘ experiences in meeting its financial leverage, i.e. in maintaining and bolstering its liquidity. This is no minor benchmark: liquidity of a firm is nothing less than its ability to meet its obligations without selling/mortgaging its fixed assets – indispensable to long-term development. Putting it in another light, long-term finance sources cannot replace short-term ones, i.e. short-term credit, especially if firm´s economic cycle is adaptable/adapted to – or even designed for – using as a rule short-term financing. Furthermore, a basic route to long-term development, a sustained increase in sales volume, needs a good use of short-term credit.

Suggested Citation

  • MILITARU, Iuliana, 2016. "Relationship Between Corporate Development And Short-Term Credit Dynamics," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 3(1), pages 156-161, October.
    • Handle: RePEc:vls:rojfme:v:3:y:2016:i:1:p:156-161
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    More about this item

    Keywords

    financing sources; trade credit; debt;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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