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European Association of Agricultural Economists >
2008 International Congress, August 26-29, 2008, Ghent, Belgium >
Please use this identifier to cite or link to this item:
http://purl.umn.edu/43861
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| Title: | The Role of Trade Credit in the Spanish Agrogood Industry |
| Authors: | Alarcon, Silverio |
| Keywords: | trade credit
agrofood industry
firm panel data |
| Issue Date: | 2008 |
| Abstract: | Trade credit is an important way of firm financing. Its habitual
practice and the excessive enlargement of the payment periods deteriorate
profitability of firms and even could affect the performance of the financial
system. In spite of the relevance of this issue there are few empirical researches
with Spanish firms. This work intends to fill this gap and to shed light on the
factors related to the extension of trade credit in a set firms of the agrofood
industry. In the theoretic and empirical literature different motives have been
proposed to explain the extension of trade credit: a mechanism to reduce
transaction costs, a financial alternative to the bank system and an additional
tool to improve commercial activities.
To contrast these ideas a panel of 388 firms for the period 1998-2005 has
been taken, and static and dynamic regression models have been estimated by
using robust methods to heteroskedasticity, autocorrelation and endogeneity
of the explanatory variables. The results confirm that trade credit receivable
is associated with more active firms and with cheaper bank financing. Furthermore,
a negative link with the size of the firm and a positive relationship
with short-term liabilities, accounts payable and bank debts, are encountered.
These findings are consistent with commercial perspectives, rather than a
pure financial view, in the sense that small and financial distressed producers
extend trade credit as a way of promoting products and increasing sales. |
| URI: | http://purl.umn.edu/43861 |
| Institution/Association: | European Association of Agricultural Economists>2008 International Congress, August 26-29, 2008, Ghent, Belgium |
| Total Pages: | 15 |
| Collections: | 2008 International Congress, August 26-29, 2008, Ghent, Belgium
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