This study answers the call of understanding trade credit determinants and consequences in different cultures and economic setups in order to be able to devise policies. Trade credit is the separation between the delivery of goods and their payments. It is affected by two types of factors including firm specific characteristics and macroeconomic conditions. This study investigates the following firm specific variables such as firm size, liquidity, product quality, price discrimination and macro-economic conditions viz GDP. Data have been collected for trade credit supply determinants of non-financial firms listed in Karachi Stock Exchange, Pakistan. The number counts for 156 firms in 13 sectors with 11 years data from 2001-2011. The results show that all the variables are significantly related to trade credit supply as hypothesized.
Tags:
Economics