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| Author: | Niskanen, J. Niskanen, M. |
| Title: | The determinants of corporate trade credit policies in a bank-dominated financial environment: the case of Finnish small firms |
| Journal: | European Financial Management
2006 : JAN, VOL. 12:1, p. 81-102 |
| Index terms: | financial markets financial policy credit case studies small business Nordic countries Finland |
| Language: | eng |
| Abstract: | This paper examines trade credit (hereafter as: tr-c.) policies of small firms operating in a bank-dominated environment in Finland. It is found that creditworthiness and access to capital markets are important determinants of tr-c. extended by sellers. The level of purchases is positively correlated with the level of accounts payable. Larger and older firms and firms with strong internal financing are less likely to use tr-c., whereas firms with a high ratio of current assets to total assets, and firms subject to loan restructurings use it more. Negative loan decisions by financial intermediaries increase and a close bank-borrower relationship decreases the probability that a firm does not take advantage of tr-c. discounts. |
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