Trade Credit, inventories and contagion effect

• Autor(a) principal: Monteiro, Marina Marques
• Data de Publicação: 2014
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.6/6185
• topic: Crédito Comercial; Crise Financeira; Efeito de Contágio; Inventários; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

This investigation access if an inventory management motivation could explain the use trade credit, as well if a trade credit contagion effect occurs during periods of financial crisis. Therefore, a panel dataset of Portuguese manufacturing SME firms, over the period of 2000-2009, and employing a panel data methodology, the results confirm the existence of an incentive for firms to offer and receive trade credit in order to promote sales in the first instance, and in a second instance, to reduce inventory levels and the associated costs. Moreover, credit constraints during a financial crisis cause firms holding high-levels of accounts receivable to postpone payments to suppliers. Specifically, high-risk firms receive more suppliers’ credit due to suppliers concern about their customer's survival.