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The purpose of this paper is to examine the determinants and motives for supply of trade credit among agro-food manufacturing firms in African countries.

The paper uses a subsample of food manufacturing firms from World Bank Enterprise Survey in eight African countries in 2014. Two-limit Tobit models are specified for the determinants of trade credit supply (TCS) and the motives for TCS are inferred from the determinants. An instrumental variable two-limit Tobit model is estimated to check the endogeneity of trade credit received (TCR) in relation to trade credit supplied.

The level of TCS is significantly related with degree of product diversification, manager experience, level of TCR and overdraft availability. From the results, financing motives (particularly liquidity and redistribution) and commercial motives (particularly marketing and quality guarantee motives) for TCS are implied.

The parameter estimates may contain both demand and supply effects as the two effects cannot be separated due to absence of information on firms’ customers in the data set. The results should be interpreted in this context.

The motives for TCS by agro-food firms is less understood in the agricultural finance literature and this paper makes an important contribution in this regard. In particular, the paper shows the degree of product diversification is directly associated with TCS, a relationship which has not been explored in the trade credit literature.

The purposes of the study are to: contribute evidence on the role played by ordinary commercial firms in providing finance to other firms by granting trade credit to customers; and test some theories about the motives of small and medium‐sized firms in extending such trade credit.

The Generalised Method of Moments is applied to an unbalanced panel of small and medium‐sized firms in the Canary Islands (Spain). Analysis of data from a unique database is used to obtain consistent estimations and to test some proposed hypotheses about the determinants of extending trade credit.

The study finds that: firms with greater access to financial markets can serve as a credit channel for clients that have difficulties in obtaining institutional financing (thus supporting the theory of financial advantage with respect to trade credit); firms can reduce transaction costs through financing clients (thus confirming that “transaction motives” are significant in granting trade credit); and that trade credit between firms known to each other reduces problems associated with information asymmetry in financial arrangements.

The findings represent correlated inferences, rather than proven causal relationships. Moreover, some results are interpretive in nature; more detailed data and analyses could assist in investigating the relationships noted here.

The paper contributes to the scarce empirical literature about the motives for granting trade credit by small and medium‐sized firms. This is also the first study to analyse this behaviour from a dataset of firms in the Canary Islands (Spain).

The purpose of this study is to examine trade credit from agrochemical vendors as an alternative source of finance for cabbage producers in the Bono East Region of Ghana. The determinants of trade credit supply and impact on cabbage producer’s profitability are investigated.

The study sample size is 260. The perception index, probit regression, negative binomial regression and the propensity score matching (PSM) was employed to assess the perception of trade credit, factors influencing trade credit supply and the impact of trade credit supply on the cabbage producer’s profitability and agrochemical vendor’s welfare respectively.

The perception index analysis revealed that the agrochemical vendors, in general, had a positive perception of trade credit. Different groups of factors influence trade credit supply. Further along, the number of times trade credit was used by the cabbage producers was influenced by several factors. On the PSM result, trade credit use had a significant positive impact on the cabbage producer’s profitability. In detail, all the matching estimations revealed that profitability increased above Gh¢ 4,000.00 (US$ 692.04). Likewise, the robustness check result (Inverse Probability Weighted Regression Adjustment (IPWRA)), was no different from the matching estimations. Generally, the result indicates that the impact of trade credit supply on the agrochemical vendor's welfare using total household expenditure, total savings and income as proxy variables for welfare were positive.

Trade credit has encountered less attention in the agricultural finance discourse; however, this study makes an imperative contribution on the same. Specifically, the study reveals the determinants of trade credit supply from agrochemical vendors and a positive impact of trade credit use on the cabbage producer’s profitability, a result which has not been investigated in the trade credit literature.

Trade credit is treated as a financial intermediation device whereby construction vendors act as financial providers to their customers through deferred payments of goods purchased. The purpose of this paper is to investigate and report upon the key factors and motives influencing vendors' decision on trade credit provision to small to medium sized construction firms.

Adopting deductive methodological approach, this paper utilises a combination of primary data emanating from structured survey questionnaires supplemented by secondary source of data from an extensive literature review, to present insightful commentary about trade credit provision in Ghana. The structured survey questionnaire was administered to 100 construction vendor firms/suppliers to elicit relevant data about their trade credit intentions. Drawing upon the principles of a total design method (TDM) of survey, a relatively high response rate of 57 percent was achieved. Principal component (factor) analysis was adopted to obtain simplification of variables and to detect underlying dimensions and reveal potential complex structures within decision variables.

The underlying constructs and motives of vendors on trade credit were intricately interwoven in two principal factors: risk distribution and liquidity; and sustaining business relationship and liquidity. Despite the uncharacteristic manifestation of the liquidity measure being associated with the two principal components, the findings demonstrate the relative importance of liquidity in the trade credit debate. A critical observation stemming from the analysis was that trade policy was absent within the trade credit market in Ghana; this poses a potential threat to trade credit exchange and its development.

The paper's methodological approach is uniquely positioned between the conceptual and empirical interface and the overarching research is pioneering within the developing world nation of Ghana. The paper's findings will be useful to contractors, particularly, small and medium size contractors who are considering feasible finance options; and vendors who seek to consolidate their clientele base.

The purpose of this paper is to draw the state of the art on the trade credit, one of the most alternative form of firm financing, especially for small- and medium-sized enterprises (SMEs).

The present study first reviews the theoretical papers focusing on the raison d’être of trade credit financing. Then the study identifies the empirical research studies in SMEs’ context and summarizes them on the basis of the following drivers: the country and the period analysed, the methodology used, the main findings and the presence of a shock in time span.

Findings reveal a discrepancy of results, especially in testing Meltzer’s hypothesis of substitution effects among trade and bank credit. The heterogeneity of results should be driven by lending infrastructure of the country analysed and the presence or not of a shock in time span considered. Financial constraints can reconcile the discrepancy of results. Then, most of the studies analysed are based on the assumption that trade credit is more expensive than bank credit.

This paper provides valuable conclusion on past and present studies on trade credit. First is providing a rule of the thumb in the reading of empirical evidences. Also researchers and academicians should deal with consideration regarding the cost of trade credit that still appears as a black box. This is an important issue in corporate finance, as it influences the financial decision of firms and it will be useful for conducting a deeper comparison on the alternative cost of firm financing.

The purpose of this paper is to examine whether the level of financial credit available in a country influences the level of trade credit provided to customers.

The authors examine the association between the supply of trade credit and the availability of country-level private financial credit using multivariate regression models that account for country-level heterogeneity, macroeconomic conditions and firm-specific characteristics. The data set is a pooled sample of publicly traded firms incorporated in 66 countries.

Supporting the re-distributional view of trade credit, robust results suggest that suppliers incorporated in countries with increased access to financial credit provide increased trade credit to their customers. Further results indicate significant differences in trade credit usage across geographical regions. Consistent with existing research using samples of US firms, the use of trade credit is correlated with firm-level measures of financial constraints and product market dynamics.

The authors provide one of the first studies to examine differences in trade credit extension across a large number of countries.

The purpose of this paper is to extend the literature on trade receivables and trade payables by examining the determinants of net trade credit.

To do that, a sample of 67,047 firms in the UK with 443,190 firm year observations is used.

The results are robust to unobserved heterogeneity and industry effects. The evidence suggests that firms with more inventories, market share and are financially distressed invest less in trade credit. Moreover, higher operating cash flow, annual sales growth, export propensity, access to bank credit and larger firms lead to higher investment in trade credit.

Additionally, the paper broadens the scope of the literature by analysing the determinants of net trade credit around the financial crisis and industry competitiveness.

The purpose of this paper is to study the influence of investor sentiment on the supply of trade credit, and further explores the difference of the effect of investor sentiment on the supply of trade credit in the environment of strong market competition and weak market competition.

The authors use panel estimation techniques to examine the impact of investor sentiment in the Chinese securities market on the supply of corporate trade credit.

This paper finds that investor sentiment has positive impact on trade credit through three channels of motivation, willingness and ability. At the same time, this paper finds that investor sentiment has stronger impact on enterprises in strong market competition than enterprises in weak market competition.

This paper expands the research on the influence of virtual economy on the real economy, analyzes the difference of the influence of investor sentiment on the supply of trade credit under different market competition conditions.

The paper perfects the mechanism of trade credit decision-making at this stage, and provides more evidence for the virtual economy to act on the real economy.

This paper provides a theoretical basis for the government functional departments to use the investor sentiment to play a positive role in trade credit to improve the market competition and guide the development of China’s capital market in the direction of rationalization and health.

In combination with market competition environment and industry characteristics, this paper investigates external irrational factors and studies how investor sentiment affects trade credit supply.

This study aims to examine the influence of stock liquidity on the trade credit of publicly listed companies in Saudi Arabia.

In this study various econometric models were used to test the data of 900 firms listed in Saudi Arabia during the period of 2010–2019.

The robust results of the various econometric models indicate that firms are more willing to offer trade credit to customers when stock liquidity is greater; however, they are less likely to rely on obtaining more payables from suppliers. The findings further indicate that payables and receivables are indeed related, but not exclusively, in the sense that more payables lead to more receivables. The study also reveals a pattern of persistence in payables and receivables during the period of study.

The sample of the present study is only made up of Saudi listed companies. Future research could extend the sample of this study taking into account listed firms in the Middle East and North Africa (MENA) region as a whole so as to gain more insights from the entire region including oil-producing and non–oil-producing countries. More studies are needed to further examine the impact of alternative options for credit access and their linkage to stock liquidity. Finally the difference in difference (DiD) method of analysis as quasi experimental method can be another extension of this research.

The findings would provide implications for managers and investors by recognizing the potential role of stock liquidity in affecting trade credit and understanding the association between the stock liquidity and trade credit. Management of the firms should look for the ways to enhance the stock liquidity of the firms so as to help in reducing the extreme debts usage and therefore, alternative source of funds can be available accordingly. Once the advantage of stock market is identified, firms' managers should search for chances and policies that can promote stock liquidity and hence make use of the advantages of being liquid.

This paper provides new evidence from the emerging market, particularly the Saudi Arabia. The attempt is one of the first in the region to broaden the knowledge about the effects of stock liquidity on trade credit. It provides market participants with insights on the role of stock liquidity in financial flexibility.

As the information asymmetry and credit rationing are existing, SMEs are finding it difficult to gain bank credit. Trade credit, as a one off substitution, gives another access to SME finance. The purpose of this paper is to examine the effects between inter‐corporate relationships (including the direct‐relationship and indirect‐relationship) and trade credit.

Following the mainstream of qualitative and quantitative research, this paper examines the relationship between SMEs and their analysis of the commercial credit financing. In the empirical research, through text‐analysis to build the variable of “the number of unions that enterprises take part in”. First, find the relate union through “baidu and googel” by the keywords of enterprise's name and the Union; then two persons select and determine which the enterprise may take part in and calculate the number. For that which cannot make sure, ask the third person. Learning from the HHI‐index, the paper calculates according to the amount and times of the enterprise related transactions to build the variable of “the concentration of enterprises related transactions”. Based on three years panel data (from 2007 to 2009) of 196 small and medium listed companies, this paper establishes the empirical models and examines the effects between inter‐corporate relationship and trade credit through the random effect model.

The paper finds that: SMEs must pay attention to inter‐enterprise relationship management. Without the power and status owned by large enterprises, SMEs have to learn how to survive in the complex and changing environment. The managers of SMEs have to develop their skills to manage the inter‐enterprise relationship. It finds the effects between inter‐enterprise relationship and trade credit seem like a “U” shape. SMEs should take part in associations wittingly and establish the relationship with the others, as all economic activities are embedded in the social network. This research shows that participating in the business associations, especially provincial associations, has a positive impact to gain trade credit.

This paper breaks through the traditional SMEs' financing theories. In this paper, the individual level theories have been extended to the organizational level. This paper also expands the study of the social capital theory and gives a more tolerable empirical test.