miun.sePublications
Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Substitute or complement?: The use of trade credit as a financing source among SMEs
Mid Sweden University, Faculty of Human Sciences, Department of Social Sciences.
Mid Sweden University, Faculty of Human Sciences, Department of Business, Economics and Law.
2017 (English)In: Management Research Review, ISSN 2040-8269, E-ISSN 2040-8277, Vol. 40, no 1, 10-27 p.Article in journal (Refereed) Published
Abstract [en]

Purpose: This study aims to investigate trade credit as a financing source among small- and medium-sized enterprises (SMEs), particularly the influence of short-term debt, long-term debt and profitability on the use of such credit. Design/methodology/approach: Ordinary least squares (OLS), fixed-effects and generalized method of moments (GMM) system models were used to analyze a large cross-sectional panel data set of 15,897 Swedish SMEs in five industry sectors for the 2009-2012 period. Findings: The study provides empirical evidence that long-term debt and profitability each significantly and negatively influence trade credit (i.e. accounts payable) and that short-term debt positively influences trade credit. Notably, while trade credit seems to complement other short-term debt, it replaces long-term debt. Moreover, firm size in terms of sales is positively related and firm age is negatively related to accounts payable. Industry affiliation is another significant explanatory variable. Practical implications: The results provide debt holders, potential investors, policymakers and academic researchers with insights into the relationship between trade credit demand, on the one hand, and external financing (i.e. short- and long-term debt) and internal retained earnings (i.e. profit), on the other. From a manager’s perspective, the findings may be important for decision-making regarding trade credit use. Originality/value: When investigating trade credit determinants, the literature has seldom distinguished between short- and long-term debt and considered that they may influence the use of trade credit in different ways. The present study adds to the literature by using OLS, fixed-effects and GMM system models to analyze a large cross-sectoral sample in a high-tax country where both bank loans and trade credit are considered important financing instruments.

Place, publisher, year, edition, pages
2017. Vol. 40, no 1, 10-27 p.
Keyword [en]
Accounts payable, Long-term debt, Short-term debt, Small- and medium-sized enterprises, Trade credit
National Category
Social Sciences
Identifiers
URN: urn:nbn:se:miun:diva-30106DOI: 10.1108/MRR-06-2015-0153ISI: 000395703100003Scopus ID: 2-s2.0-85010060622OAI: oai:DiVA.org:miun-30106DiVA: diva2:1073778
Available from: 2017-02-13 Created: 2017-02-13 Last updated: 2017-04-24Bibliographically approved

Open Access in DiVA

No full text

Other links

Publisher's full textScopus

Search in DiVA

By author/editor
Yazdanfar, DarushÖhman, Peter
By organisation
Department of Social SciencesDepartment of Business, Economics and Law
In the same journal
Management Research Review
Social Sciences

Search outside of DiVA

GoogleGoogle Scholar

Altmetric score

Total: 148 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf