Factors influencing the use of trade credit in financing Polish listed companies

Aleksandra Duliniec,Natalia Świda

doi:10.18559/ebr.2021.1.7

Abstract

The aim of this article is to identify the most important factors influencing the use of trade credit and to assess their significance for Polish listed companies taking into consideration the role of trade credit as a source of financing. Theoretical and empirical literature does not provide clear guidance regarding factors influencing the use of trade credit. In this study the linear regression model with fixed effects for years is used to describe trade credit use in listed Polish companies in the period 2002–2018. The findings show that the following factors have the most pronounced influence on the use of trade credit: trade payables in the previous period, trade receivables, long-term debt, liquidity and short-term debt. Both long-term and short-term debt financing and trade payables are substitutes for Polish listed companies. Lower liquidity and higher trade receivables are related to a higher use of trade credit.

Highlights

The aim of the article is to identify the most important factors influencing the use of trade credit and to assess their significance for Polish listed companies
The findings show that the following factors have the most pronounced influence on the use of trade credit: trade payables in the previous period, trade receivables, longterm debt, liquidity and short-term debt
This study identifies the factors influencing the use of trade payables in the light of other authors’ research and verifies the empirical significance of the influence of these factors on the use of trade credit in Polish listed companies

Summary

Introduction

The aim of the article is to identify the most important factors influencing the use of trade credit and to assess their significance for Polish listed companies. Noteworthy is the research conducted on the basis of individual panel data from Central Statistical Office reports for the years 1995–2011, for almost fifty thousand Polish companies (Białek-Jaworska & Nehrebecka, 2015). Another attempt at empirical verification of factors influencing the amount of trade payables used by the companies in Poland is most justified.

Trade credit as a source of financing for business operations

Factors influencing the company’s trade credit liabilities

Description of the research

Results of the study

Conclusions

Aims and ScopAeims and Scope