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Determinants of trade credit supply among the Ghanaian construction sector

De-Graft Owusu-Manu (Department of Building Technology, Kwame Nkrumah University of Science and Technology, Kwame Nkrumah, Ghana)
Gary D. Holt (Birmingham City Business School, Birmingham, UK and University of Central Lancashire, Preston, UK)
David J. Edwards (Centre for Business Innovation and Enterprise, Birmingham City Business School, Birmingham, UK)
Edward Badu (Department of Building Technology, Kwame Nkrumah University of Science and Technology, Kwame Nkrumah, Ghana)

Built Environment Project and Asset Management

ISSN: 2044-124X

Article publication date: 2 September 2014

483

Abstract

Purpose

Trade credit (TC) provides access to capital for construction contractors globally and is an important source of finance in both developed and developing countries. The purpose of this paper is to explore key factors underpinning construction suppliers’ decisions to provide TC to Ghanaian construction firms.

Design/methodology/approach

Primary data from a structured survey of 75 construction suppliers are analysed. Principal component (factor) analysis explores complex structures among suppliers’ decision-making variables.

Findings

Underlying constructs of decision criteria exist among seven key factors: financial profile of the contractor; parties’ profit margins; asset portfolio and project particulars; TC quantum and repayment terms; age and experience of the contractor; contractor corporate image; and parties’ cash flows.

Originality/value

This is a new decision criteria framework for suppliers and contractors, who utilise TC.

Keywords

Citation

Owusu-Manu, D.-G., D. Holt, G., J. Edwards, D. and Badu, E. (2014), "Determinants of trade credit supply among the Ghanaian construction sector", Built Environment Project and Asset Management, Vol. 4 No. 4, pp. 368-383. https://doi.org/10.1108/BEPAM-11-2013-0057

Publisher

:

Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

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