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We examine whether managerial ability affects the relationship between corporate digital transformation and trade credit. To measure digital transformation, we perform a textual analysis of companies' annual reports using a customized Chinese dictionary containing digital transformation keywords based on national policy documents and academic literature. Using 10,554 observations from 2509 A‐shares listed companies in China, we show that corporate digital transformation has significantly impacted trade credit. Managerial ability enhances the relationship between digital transformation and received trade credit but does not change the impact between digital transformation and provided trade credit. A battery of robustness tests confirms the findings. [ABSTRACT FROM AUTHOR]

Millions of mom‐and‐pop nanostores dominate the grocery retail landscape in emerging markets. As nanostores are cash and storage space constrained, their suppliers tend to visit them with a high frequency, causing high operational costs. It is unclear if credit could mitigate such costs by allowing for a lower visit frequency. To investigate this, we conduct a randomized field experiment on nanostores that have not made recent use of supplier credit, with the objective to uncover how trade credits interact with the visit frequency and with the available storage space to shape shopkeepers' ordering behavior. We find that trade credits moderate the positive relationship between visit frequency and bi‐weekly order size, with credit effects being salient under low frequency visits. Storage space, by contrast, does not directionally shape shopkeepers' ordering behavior. While trade credits may more than offset the negative effect of low frequency visits among adopting nanostores, credit adoption remains challenging, with only 24% of nanostores assigned to the credit condition actually adopting the credit. Remarkably, not a single credit line was defaulted over the entire duration of the intervention. In terms of assortment, trade credit is mostly used to acquire nanostores' core assortment of popular, low‐price items with low physical volume. We contribute to the extant literature by showing that the gesture by the supplier to extend trade credit may only partly legitimize a reduction of the visit frequency. Highlights: Nanostore suppliers can anticipate difficulties financing their way out of high frequency visits at scale, regardless of nanostores' available storage space.Providing trade credits may justify a lower visit frequency for nanostores that are willing to transact with trade credits, when geographic expansion is possible at a reduced cost or when operational costs are high.Shopkeepers' exhibit a conservative ordering behavior, leveraging order financing to acquire their core assortment of popular, low‐price items with low physical volume. [ABSTRACT FROM AUTHOR]

This study investigates the effects of cross- and stable shareholdings on the relationship between accounting quality and trade credit in Japan. Cross- and stable shareholdings are well-known features of Japanese corporate governance, as a private information-sharing system. The results indicate that the trade credit of customers without either cross- or stable shareholdings increases with accounting quality, and in most cases, such shareholdings weaken the relationship between accounting quality and trade credit. These findings suggest that close ties to cross- and stable shareholders reduce the importance of accounting information through sharing private information. The findings will enhance the understanding of ownership structure's potential impact. Overall, this study contributes to the literature by demonstrating the role of accounting quality in financing and the factors that reduce this role. In addition, this study highlights policy implications for the regulatory initiatives to unwind cross-shareholdings, which may affect private information sharing. Data Availability: Data are available from sources indicated in the text. JEL Classifications: G34; M41. [ABSTRACT FROM AUTHOR]

Understanding the factors influencing professionals' commitment to suppliers when acquiring pesticide products is crucial in urban pest management. The study assesses how price, quality, trade credit, and supplier relationships impact commitment to purchasing pesticides. Employing partial least squares structural equation modelling, the study's findings indicate that when urban pest management professionals decide on pesticide purchases, their decisions are notably influenced by product price, the availability of trade credit, and product quality. Surprisingly, a positive relationship with suppliers does not influence their commitment to purchasing pesticides. This study discusses the variations and offers implications for managers in the Philippines.

This article studies the accounting and analysis of accounts receivable, particularly trade credit, as a key financial management tool within the global competitive environment. The authors explore theoretical and practical aspects of managing accounts receivable and methods to assess its impact on financial stability. Emphasis is placed on the theoretical justification for non-standard practices in accounting and analyzing trade credit as a separate asset, aiding in better risk identification of bad debts that affect enterprise viability. The study highlights that accounting entries for income registration result in constant receivables within assets, necessitating proper management strategies. Customer receivables, often from trade credit, require a dedicated debt management and collection policy to minimize operational risks. The authors point out that national and international accounting standards do not classify trade credit as a separate asset, complicating financial risk management and analysis. Effective management methods, including data collection on customer creditworthiness, are critical for financial stability. The article underscores the importance of systematizing empirical studies to support theoretical development in accounting and analyzing accounts receivable. Effective trade credit management is vital for enterprise competitiveness. The study employs dialectical and deductive approaches to draw logical conclusions on the relationship between receivable management and financial stability. The authors review Ukrainian and international legislation to identify legal aspects of receivables management. A high proportion of bills of exchange in receivables indicates customer credit risk, necessitating an effective credit policy. Recommendations include analyzing customer creditworthiness and using modern financial risk assessment methods. This article proposes approaches to accounting and analyzing accounts receivable, enhancing the scientific theory of financial management and improving the application of theoretical knowledge in modern economic management.

This paper explores the impact of firms’ ESG performance on their trade credit financing and working capital efficiency, utilizing a sample of 586 Indian firms listed on the National Stock Exchange (NSE) from 2015 to 2022. The study offers robust evidence supporting the positive connection between superior ESG disclosure and trade credit, as well as the negative link between ESG disclosure and the cash conversion cycle. These findings underscore the role of ESG disclosure in increasing suppliers’ willingness to extend trade credit and facilitating efficient working capital management practices. The result shows that improved ESG disclosure practices increase payable turnover days and reduce both inventory turnover and receivable turnover days, reflecting the enhanced operational efficiency and market power of the firm.

Agriculture is crucial for the economy and individuals, and there is a pressing need to improve its quality, efficiency, and competitiveness in emerging countries. This study uses data from Chinese-listed companies to investigate the effect of trade credit on agricultural firms' total factor productivity. The results demonstrate that trade credit access and provision can increase agribusinesses' total factor productivity. Heterogeneity analysis reveals that access to business credit has a higher contribution to total factor productivity for agribusinesses in the primary sector, for firms in the versus maturity stage, and with low or medium supplier concentration. The provision of trade credit has a more pronounced positive impact on agribusinesses in the maturing stage and enterprises with low or medium customer concentration. This paper further validates the channels of action through which trade credit affects a firm's highquality development. This research makes a valuable contribution to enhancing the quality and productivity of China's agricultural sector. [ABSTRACT FROM AUTHOR]

This study investigates the consequences of bank mergers on non-financial borrowers' working capital management. We find evidence that bank mergers increase corporate cash holdings and decrease receivables and investments in inventories by reducing bank credit availability. Bank mergers also decrease trade credit used through the reduction in bank credit availability. These findings are new contributions to the literature, suggesting that borrowing firms find it more difficult to manage working capital after bank mergers occur and that bank-dependent firms find it more difficult to manage working capital than their non-dependent counterparts after mergers. [ABSTRACT FROM AUTHOR]

This paper investigates the effects of trade credit on export survival by using cross-country panel data with 41 countries from 1997 to 2014. The export survival rate is the ratio of the number of survivors to the entrants. Trade credit is defined as the net value received of the liabilities and claims arising from receiving or providing supplier credit and advance payment for transactions in goods and services. The empirical results indicate that net trade credit received by the exporters is positively associated with the possibility of export survival and that this effect is notably stronger for second- and third-year firms than for first-year entrants, for crisis and post-crisis periods compared with normal periods, and for cases where endogeneity problem is taken into account. These findings suggest that in order to enhance the sustainability of export flow, governments should employ policies to facilitate greater advance payment, especially during periods of financial distress. [ABSTRACT FROM AUTHOR]

This article studies the accounting and analysis of accounts receivable, particularly trade credit, as a key financial management tool within the global competitive environment. The authors explore theoretical and practical aspects of managing accounts receivable and methods to assess its impact on financial stability. Emphasis is placed on the theoretical justification for non-standard practices in accounting and analyzing trade credit as a separate asset, aiding in better risk identification of bad debts that affect enterprise viability. The study highlights that accounting entries for income registration result in constant receivables within assets, necessitating proper management strategies. Customer receivables, often from trade credit, require a dedicated debt management and collection policy to minimize operational risks. The authors point out that national and international accounting standards do not classify trade credit as a separate asset, complicating financial risk management and analysis. Effective management methods, including data collection on customer creditworthiness, are critical for financial stability. The article underscores the importance of systematizing empirical studies to support theoretical development in accounting and analyzing accounts receivable. Effective trade credit management is vital for enterprise competitiveness. The study employs dialectical and deductive approaches to draw logical conclusions on the relationship between receivable management and financial stability. The authors review Ukrainian and international legislation to identify legal aspects of receivables management. A high proportion of bills of exchange in receivables indicates customer credit risk, necessitating an effective credit policy. Recommendations include analyzing customer creditworthiness and using modern financial risk assessment methods. This article proposes approaches to accounting and analyzing accounts receivable, enhancing the scientific theory of financial management and improving the application of theoretical knowledge in modern economic management. [ABSTRACT FROM AUTHOR]

This study examines two retailer-initiated pre-shipment financing programs to assist capital-constrained suppliers in securing external funds for production. The first program is retailer-sponsored financing (RSF), an emerging practice in developing economies. Under RSF, the retailer commits to sharing the loan repayment obligation with the supplier by agreeing to pay up to a specific portion of the supplier's bank loan repayment. The second program is advance payment (AP), a common payment arrangement wherein the retailer pays a part of the wholesale amount upfront to support the supplier's production costs. We analyze a supply chain comprising a supplier and retailer. The retailer must choose between offering RSF, AP, or neither. Without RSF or AP, the supplier must opt for bank-direct financing when it is short of funds and bear the full responsibility of repaying the loan principal and interest. Our findings reveal a divergence in supplier and retailer preferences. Specifically, the supplier favors RSF as it not only lowers the marginal production cost but also permits the supplier to charge a higher risk premium to the retailer compared to AP. Conversely, the retailer prefers AP primarily due to the latter reason. Our research underscores the significance of RSF as a distinct financing alternative, enabling retailers to aid a supplier segment that cannot rely solely on AP. RSF also proves to be advantageous for banks by expanding their supplier clientele and boosting their lending volume. Interestingly, the supplier's and retailer's bankruptcy risks tend to have opposite impacts on the value of RSF. [ABSTRACT FROM AUTHOR]

Using executives' decision horizon as a measure of internal governance, this study examines the association between customer's internal governance and supplier's extension of trade credit. Suppliers may extend more trade credit to customers with strong internal governance because of their lower operational risk, higher firm performance, and better information environment. However, firms with better internal governance may have easier access to other sources of financing, and thus may need less trade credit. Using a sample of US listed firms between 1992 and 2021, we find that suppliers extend more trade credit to customers with strong internal governance. We also find that the association between internal governance and trade credit is more pronounced for financially, and informationally constrained firms. Our results are robust to alternative measures and specifications. Incremental to prior studies, we show that effectiveness of customers' internal governance affects suppliers' lending decisions. [ABSTRACT FROM AUTHOR]

This paper examines whether and how capital age influences trade credit extended by suppliers. We find that firms with older capital are associated with a reduction in trade credit offered by suppliers, which is consistent with the view that vintage capital, with outdated technology, is detrimental to firms. Employee outside opportunity, labour mobility and organisational capital are important factors that moderate the association between capital age on trade credit. Our findings are not driven by specific industry sectors or periods and remain robust to alternative measures of trade credit and to endogeneity concerns. In addition, we show evidence that shareholders view vintage capital as value‐destructive. In sum, this study reveals that risk exposure associated with capital age matters for corporate trade credit decisions. [ABSTRACT FROM AUTHOR]

Credit from suppliers is an important source of finance for firms. It can sustain firms' financial flexibility even in periods of downturn. In this study, using a large database of 90,763 Italian firms in the 2015–2021 period, we investigated how local financial development affects the trade-credit policies of SMEs and how this effect is conditioned by the degree of judicial enforcement. Given that trade credit can be a substitute for bank financing, we find that firms make more use of trade credit in developed financial markets. Moreover, we highlight the finding that a higher degree of judicial enforcement, which reinforces the role of contracts in the market, amplifies this effect. Finally, we observe that the COVID-19 crisis has reduced both the positive effect of local financial development and the positive moderating effect of enforcement in the use of trade credit. [ABSTRACT FROM AUTHOR]

In the present unstable business environment, supply chains are considerably impacted by disruptions, necessitating the implementation of resilience strategies. These strategies, however, pose significant financial challenges for companies. Therefore, financing is essential in developing resilient supply chain networks. In addition to utilizing existing capital, options such as bank loans and trade credit can be employed to alleviate the financial burden and enhance working capital. The present scholarship has failed to address the issue of financial strain resulting from the adoption of resilience strategies. Additionally, the significance of trade credit and repayment scheduling in all levels of the supply chain network also left under-researched. To fill this research gap, this paper proposes a three-tiered supply chain network consisting of main/support suppliers, factories, and distribution centers under uncertain demand conditions. The network is developed to effectively handle demand uncertainty and achieve optimal net present value and demand estimation. To solve the bi-objective model of the study, a preemptive fuzzy ideal programming approach accompanied by the implementation of the CPLEX solver is utilized. The findings lend support to the importance of securing financial support for support suppliers and establishing effective trade credit agreements across all levels of the supply chain. [ABSTRACT FROM AUTHOR]

This study investigates the relationship between the utilisation of digital payment platforms and the decision of informal firms to engage in the demand for or supply of trade credit. Recognizing the pivotal role of trade credit in alleviating financial constraints for informal enterprises, our research employs a recursive bivariate probit model to assess the impact of digital payment platform usage on both the demand for and supply of trade credit among informal firms in Ghana. Leveraging data from the World Bank Enterprise Survey, we find that 13.83 % of informal firms receive trade credit from suppliers, while 26.89 % extend trade credit to customers. Additionally, 49.6 % of firms use digital payment platforms for their business transactions. The study finds that digital payment platforms increase the probability of firms engaging in the demand and supply of trade credit. It argues that digital payments enhance transaction efficiency, convenience, and security, potentially reducing associated transaction costs and facilitating business interactions across distant locations. Various factors, including firm age, maintenance of accounting records, sales volume, owner experience, credit facilities, internet use for social media marketing, and operating hours, significantly influence the decision to engage in trade credit activities. The robustness of our results is confirmed through alternative estimation techniques. Recommendations include policy interventions aimed at promoting the digitalization of informal firms, supported by government investments in digital infrastructure. It is recommended that firms and their suppliers and customers should adopt these digital payment platforms in order to facilitate their use of trade credit in business transactions. A regulatory environment fostering business trust and responsible use of digital payment platforms is crucial, necessitating measures to ensure data protection, security, and ethical conduct within the digital payments’ ecosystem.

This paper investigates how credit information sharing affects corporate trade credit financing. Utilising the difference‐in‐differences method, we find a significant reduction in trade credit for infra‐marginal bank borrowers following the introduction of the Chinese National Enterprise Credit Information Publicity System (NECIPS). To reveal the mechanisms underlying the reduction in trade credit, we show that the NECIPS alleviates information asymmetry and increases formal finance access. This financing substitution effect is magnified by weak bargaining power in product markets. Our findings complement the literature on the determinants of trade credit and underscore the indispensable role of the public credit registry. [ABSTRACT FROM AUTHOR]

As low-carbon products increasingly become popular among consumers, the manufacturers have begun to advocate low-carbon supply chain to meet consumers' low-carbon preferences. However, low-carbon investments inevitably bring financing constraints to the supply chain. To provide a potential solution to relieve the financial constrain, we established a two-echelon supply chain consisting of a low-carbon product manufacturer and a retailer. Supply chain members can effectively solve their financing constraints by utilizing portfolio financing consisting of the bank loan (BL), trade credit (TC), and asset-based securitization (ABS). We found that under the financial mode of BL and DC (Dual credit refers to the combination of bank loan and trade credit), only when consumers are highly price-sensitive to low-carbon products can tax preference incentivize the manufacturer to reduce carbon emissions. Under DC mode, consumer's strong low-carbon preference will push up the retail price level of low-cost products; Under portfolio financing with ABS & DC, consumers' strong low-carbon preference will force up the retail price level of low-carbon products with low price sensitivity. Compared with pure BL and DC, the cash flow under portfolio financing is the tightest. Besides, we took capital demand of the multi-stage scenario into consideration. Moreover, we found that the tax rate and tax deduction ratio of carbon emissions reduction will affect the retail price, wholesale price, and financing decision in the three financial modes when satisfying certain conditions. [ABSTRACT FROM AUTHOR]

This paper examines a two-period dynamic contracting in a supply chain under information asymmetry, where a supplier sells a product to a retailer via a trade credit contract. It is found that the retailer always prefers to conceal her actual cost information thus signal as a higher-cost type in the first period to pursue a higher information rent, which would decrease the supplier's profit and thereby the overall profit of the supply chain. To mitigate this ratchet effect, we introduce a reputation compensation mechanism in the two-period trade credit setting. This mechanism could alleviate the information asymmetry to a certain extent as there exists a threshold that incentivizes the retailer to share her true cost information in the earlier period. Moreover, the retailer might claim as a lower-cost type when the supplier offers a relatively higher reputation compensation to take full advantage of her information. Therefore, the supplier should provide trade credit with a reasonable reputation compensation in a two-period setting to enhance his expected profit. [ABSTRACT FROM AUTHOR]

Supply Chain Finance (SCF), an important way of integrating industry and finance that has emerged in recent decades, has attracted the interest of both industry and academia. A large number of conceptual studies on SCF support the theory that SCF benefits supply chains by alleviating financing problems and maintaining stability. The focal firms which are the main SCF practices provider help alleviating the financing problem of their partners by weakening part of the working capital management. However, SCF-oriented practice on the focal firm and traditional corporate finance theory which earing profit by improving working capital management are not aligned. This paper attempts to provide empirical evidence to explain this phenomenon on the SCF-oriented perspective. Secondary panel data analysis is employed. The impact of focal firms providing SCF services is used to represent SCF practices in the supply chain since focal firms dominate SCF activities. Cash Conversion Cycle (time perspective), trade credit and prepayment (volume perspective) of the focal firms are independent variables of the analysis. Three type of performances, financial, risk and operations, are dependent variables of the analysis. This study found that a focal firm providing SCF can conditionally improve their firm's financial performance, risk levels and operations management. Results from different industrial analyses suggest that tertiary industries are best suited to implementing SCF activities. Providing SCF also benefits the firm-level performance of state-owned enterprises. This is the first paper that comprehensively analyses the effects of SCF implementation with different firm characteristics from both a time perspective and a volume perspective. [ABSTRACT FROM AUTHOR]

Reverse factoring, a financial scheme in which established retailers facilitate financing for suppliers, is becoming an increasingly important tool in the industry. Normally, an SME supplier, a core retailer and a bank participate in the reverse factoring scheme. A three-level Stackelberg game is proposed in this study to investigate the interaction of the participants. The closed-form equilibria of the retailer's replenishment decision, the supplier's payment term decision and the bank's financing decision are derived from the theoretical model. To our knowledge, this study is the first attempt which takes banks into account and endogenises their interest rates in the modelling of reverse factoring. The reverse factoring scheme is compared with commercial loans and traditional factoring. Compared to commercial loans, the introduction of factoring can lower credit risk, but fraud risk still exists. Reverse factoring solves this fraud problem and further decreases the financing cost for the supplier. Consequently, reverse factoring benefits the retailer through a significantly increased payment extension granted by the supplier. The numerical results also indicate that the utility of the bank significantly improves by 8–50% under varying levels of default risk compared with traditional factoring. Our study provides incentives and guidelines for supply chain participants to adopt such schemes when faced with capital constraints and the credit risk of the supplier. [ABSTRACT FROM AUTHOR]

Supply Chain Finance (SCF), an important way of integrating industry and finance that has emerged in recent decades, has attracted the interest of both industry and academia. A large number of conceptual studies on SCF support the theory that SCF benefits supply chains by alleviating financing problems and maintaining stability. The focal firms which are the main SCF practices provider help alleviating the financing problem of their partners by weakening part of the working capital management. However, SCF-oriented practice on the focal firm and traditional corporate finance theory which earing profit by improving working capital management are not aligned. This paper attempts to provide empirical evidence to explain this phenomenon on the SCF-oriented perspective. Secondary panel data analysis is employed. The impact of focal firms providing SCF services is used to represent SCF practices in the supply chain since focal firms dominate SCF activities. Cash Conversion Cycle (time perspective), trade credit and prepayment (volume perspective) of the focal firms are independent variables of the analysis. Three type of performances, financial, risk and operations, are dependent variables of the analysis. This study found that a focal firm providing SCF can conditionally improve their firm's financial performance, risk levels and operations management. Results from different industrial analyses suggest that tertiary industries are best suited to implementing SCF activities. Providing SCF also benefits the firm-level performance of state-owned enterprises. This is the first paper that comprehensively analyses the effects of SCF implementation with different firm characteristics from both a time perspective and a volume perspective. [ABSTRACT FROM AUTHOR]

Whether the intellectual property protection (IPP) system can improve the financing environment for enterprise innovation is a poorly studied research issue. Taking the Chinese 'three-in-one trial' reform of intellectual property rights (IPRs) as a quasi-natural experiment; we investigate the impact of strengthening IPP on trade credit financing of high-tech enterprises. The results show that strengthening IPP can promote their trade credit by about 2%, and the technology market effect, innovation effect and information effect are the underlying mechanisms. Further tests indicate that the promotion effects of IPP are more obvious on high-tech enterprises with lower government support, lower proportion of fixed assets and healthier government–business relationship. Different from the previous literature, which focuses on the relationship between IPP and innovation activities or benefits, this article expands the literature by investigating its impact on innovation financing and fills the research gap of the impact of IPP on capital market information searching. [ABSTRACT FROM AUTHOR]

Financial capability is one of the primary drivers for buyers to make purchases. Therefore, sellers must set an optimum selling price and consider trade credit facilities to attract more demand. This paper proposes an inventory decision model in which customer demand depends on the price and number of credit installments to serve low-abled buyers. This study has developed a demand function with a positive impact on installment policies and the effect of the selling price. Two models have been formulated to optimize the selling price and positive stock time, m total profit, with and without installment policies. Then, numerical examples and sensitivity analysis illustrate the proposed model for different cases. The study has found that the selling price and positive stock time can be optimized. Profits can be higher in the case of an installment facility than in the case without an installment facility. It shows positive responses from the buyer to the installment policy.

AbstractGlobally, SMEs contribute immensely to economic growth and development in both developed and developing countries. This necessitate the need for funding for SMEs for them to contribute meaningfully and sustainably to economic growth and development. Nevertheless, SMEs funding remain a challenge in most countries especially developing ones. Therefore, this study aimed to establish the effect of debt financing (short-term debt, long-term debt, and trade credit) on the financial performance of SMEs in Zimbabwe. Financing SMEs has been a challenge for many SMEs worldwide. Notwithstanding that SMEs contribute immensely to the growth of an economy, SMEs remain underfunded especially in developing economies. Their contributions include poverty reduction, increased job opportunities, competitiveness, and productivity in the industrial sector. This study adopted a positivism philosophy and a cross sectional survey design. Quantitative data were gathered from 210 SMEs using a structured questionnaire with Likert-type responses. The findings show that debt financing (short-term debt, long-term debt, and trade credit) positively influences the financial performance in emerging markets. This study contributes to studies that prove a significant relationship between debt financing and financial performance in sectors other than SMEs. Thus, SMEs are advised to use debt financing to improve their financial performance.

Purpose: To determine small and medium-sized enterprises’ (SMEs) perception related to their trade credit management effectiveness. Design/methodology/approach: Quantitative research design with purposive sampling as the sampling method, administrated to 10 450 SMEs within South Africa. Findings/results: The results indicate SMEs perceive their trade credit management as effective. Practical implications: The article reveals how SMEs perceive their trade credit management by identifying their effectiveness in managing trade credit. Originality/value: By raising awareness pertaining to SMEs’ perceptions around their trade credit management effectiveness, SMEs can become more observant of their own trade credit management effectiveness and overall finances. Thereby, SMEs’ awareness could be improved to become financially viable and, in so doing, empower SMEs to foster economic development within South Africa. Given the results revealing SMEs’ perception as effective in managing trade credit, the study adds value by providing insight as to what financial problems, apart from trade credit ineffectiveness, could contribute to their business failure. There is a need therefore to investigate why SMEs continue to fail at such high rates because of financial problems in order to determine the root causes and types of financial problems contributing to SME business failure.

In today's era of sustainable development, green inventory systems with a motto to reduce carbon emissions are crucial for economic growth and development. Green inventory systems managing deteriorating items need special attention since spoilage and deterioration result in a significant loss of items which hampers customers' satisfaction. The deteriorating items have an adverse impact on demand as the products decay continuously which also has a strong influence on the customers' purchase decision. Thus, a price-sensitive demand is a more realistic assumption. Further, the main sources of carbon emissions in operating the inventory system are based on the storage amount and the frequency of delivery. Besides, in the business world, both the supplier and the retailer accept the credit to make their business position strong, because the credit not only strengthens their business relationships but also increases the scale of their profits. In this paper, we consider a sustainable inventory model for non-instantaneous deteriorating items with price sensitive demand, time varying deterioration rate under bi-level trade credit and carbon tax policy in order to achieve sustainability goals. Besides, to reduce deterioration rate, retailers invest some cost to prevent product degradation/decay, known as preservation technology, is also inserted. In the sequel, not only the supplier would offer fixed credit period to the retailer, but retailer also adopt the trade credit policy to the customers in order to promote the market competition. The retailer can accumulate revenue and interest after the customer pays for the amount of purchasing cost to the retailer until the end of the trade credit period offered by the supplier. Firstly, a mathematical model is formulated for the given scenario so as to determine the optimal replenishment cycle time, selling price, and preservation technology investment strategies which maximize the total profit of the inventory system and some useful theoretical results have been framed to characterize the optimal solutions. An algorithm is designed to derive the optimal solutions of the model. Finally, numerical examples and managerial implications are incorporated to analyze the behavior of the proposed model. [ABSTRACT FROM AUTHOR]

Production systems are subject to imperfect processes among other factors that may produce items of imperfect quality. To avoid further losses, regular preventive maintenance, and system breakdowns, firms can make changes in their production planning decisions or invest in a green inventory management. Every manufacturing system generates some harmful by-products which are the causes of environmental pollution, and it is increasing day by day. As a result, one of the goals of this research is to develop a sustainable smart manufacturing model with less waste and controlled pollution. Moreover, permissible delay in payment is a popular payment method and important proportion of company finance. This research proposes a manufacturing plan for products by controlling pollution through sustainable and smart production under warranty and preventive maintenance performed with trade credits. Two different sustainable production models are presented here by considering pollution control costs. A sustainable production model with variable pollution costs is examined under the influence of three pollution control mechanisms to improve the model's applicability. The paper's novelty lies in introducing pollution control costs and pollution control mechanisms together in a flexible, sustainable production system. In comparison with the other models, the model with a variable pollution cost appears to be more sustainable as, in this case, there is a 27.76% reduction in the pollution level compared to the other models. Implementing three pollution-controlling strategies, such as pollution cap, pollution cap & trade, and pollution tax, resulted in reductions of 32.52%, 1.72%, and 0.84% in pollution levels, respectively. A sensitivity analysis of the obtained results is also carried out to show the model's strength and robustness. [ABSTRACT FROM AUTHOR]

This study investigates the relationship between trade credit and sustainable economic growth, bank credit extension, and imports in the context of 15 European non-financial sectors spanning 2005Q1 to 2019Q2. Furthermore, it attempts to unveil the nonlinear relationship between trade and bank credit extension. To achieve these aims, balanced panel data are constructed and second-generation panel data are used to analyze Panel AMG Estimation, and an improved panel causality test for heterogeneous panels is employed. To enhance the robustness of the study, the results are scrutinized on a country-specific basis. The findings revealed a positive relationship between trade credit and both sustainable economic growth and imports, whereas a negative correlation was found with bank credit extension. These divergent outcomes at the country level were thoroughly discussed. Finally, a bilateral causality is identified between trade credit and economic growth, bank credit extension, and total manufacturing production, whereas a unidirectional causality is found with import activities. [ABSTRACT FROM AUTHOR]

Trade credit is an important source of short-term financing and an integrated part in supply contracts. Although a number of theories have been proposed on how trade credit could improve supply chain efficiency, causal studies on the impact of trade credit on operational decisions are scarce. In this study, we examine the impact of trade credit on inventory decisions using an empirical strategy that leverages (i) an exogenous shock imparted by the French government's intervention to impose a ceiling on trade credit duration, (ii) a triple difference-in-differences identification strategy, and (iii) synthetic controls (SCs). By considering the 60-day ceiling coverage and SC construction requirements, we identify four French retail sectors as our main sample. Among them, in the postregulation period, the hardware retail sector firms on average exhibited a significant 16% decline in trade credit usage. Correspondingly, these firms also displayed a significant 11% decline in inventory level. In the remaining three sectors, we found mixed results in the main sample. All the four sectors, however, show consistent support for a causal link between trade credit and inventory in a subsample compiled using a stringent 90-day ceiling criterion. Collectively, our findings offer direct evidence that trade credit is an indispensable financing source for inventory procurement. Finally, in the postregulation period, the hardware retailers exhibited a 15.5% decline in revenue and 3.5% reduction in gross profit. This cautions policy makers that regulations limiting the use of trade credit may have unintended consequences on downstream firms, and may harm overall supply chain efficiency. This paper was accepted by Vishal Gaur, operations management. Funding: This work was supported by Indiana University Bloomington and the London Business School. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.4600. [ABSTRACT FROM AUTHOR]

This article analyses how creditor rights affect the trade credit channel of monetary policy. We also aim to test whether these effects were conditioned by the global financial crisis of 2008. Using a sample of 15,356 firms from 29 countries (2001–2017), we found that in normal times or in countries not very severely affected by the financial crisis, trade credit receivables increase during monetary restrictions. Moreover, this increase is less pronounced as creditor protection strengthens. In countries strongly affected by the financial crisis, however, trade credit receivables do not react or even decrease after monetary expansions, regardless of the degree of creditor protection. Furthermore, the results of trade credit payables and net trade credit are not conclusive. JEL CLASSIFICATION: E52; K22; G32 [ABSTRACT FROM AUTHOR]

Globally, SMEs contribute immensely to economic growth and development in both developed and developing countries. This necessitate the need for funding for SMEs for them to contribute meaningfully and sustainably to economic growth and development. Nevertheless, SMEs funding remain a challenge in most countries especially developing ones. Therefore, this study aimed to establish the effect of debt financing (short-term debt, long-term debt, and trade credit) on the financial performance of SMEs in Zimbabwe. Financing SMEs has been a challenge for many SMEs worldwide. Notwithstanding that SMEs contribute immensely to the growth of an economy, SMEs remain underfunded especially in developing economies. Their contributions include poverty reduction, increased job opportunities, competitiveness, and productivity in the industrial sector. This study adopted a positivism philosophy and a cross sectional survey design. Quantitative data were gathered from 210 SMEs using a structured questionnaire with Likert-type responses. The findings show that debt financing (short-term debt, long-term debt, and trade credit) positively influences the financial performance in emerging markets. This study contributes to studies that prove a significant relationship between debt financing and financial performance in sectors other than SMEs. Thus, SMEs are advised to use debt financing to improve their financial performance. [ABSTRACT FROM AUTHOR]

This work analyses the determinants of trade credit granted and received and the effect of the 2008 financial crisis on it. Using a sample of 96,417 Portuguese SMEs from the nonfinancial sector for the period 2010-2019, we found that trade credit plays an important role in firms' financing policies. Firms with better access to the credit market act as financial intermediaries and grant financing to firms that have difficulty accessing credit. Moreover, the use of trade credit seems to be a substitute for bank financing. We also found that firms use trade credit as a marketing tool to increase their sales. Finally, we found a slump in credit granted to customers after the 2008 financial crisis, which seems to mimic the contraction in aggregate bank credit. [ABSTRACT FROM AUTHOR]

As a critical aspect of corporate financing strategies, high-quality trade credit has been acknowledged as a favorable indicator for external stakeholders. Given the increasing prominence of sustainable development, it is worthwhile to explore whether an advanced environmental management system facilitates the attainment of financing for business operations. Therefore, to respond to this question, this study utilizes panel data spanning from 2012 to 2021, comprising Chinese listed firms in four energy and environment-related sectors, with the environmental dimension score of the CSI ESG scoring system employed for categorizing the sample into high and low environmental governance groups. The results reconcile the conflicting studies and find an inverted U-shaped effect between trade credit and corporate bank loans with lower levels of environmental governance. Within the domain characterized by higher environmental governance, the two are substituted for each other. In addition, this study introduces the Shapely decomposition method for the first time to quantify the contribution of trade credit to corporate bank loans. Drawing from these findings, we proposed practical advice to firms, financial institutions, and the government on how to choose between bank loans and trade credit against the background of sustainable development. [ABSTRACT FROM AUTHOR]

Large lending in the banking industry has sparked concerns about banks' efficiency performance, particularly, if it is related to their credit risk, as trade credit, provided by large, creditworthy firms. We provide evidence of a rather neglected issue regarding the impact of large lending on banks' efficiency using cost and profit stochastic functions. A unique dataset was constructed concerning all US banks collected from the Statistics on Depository Institutions report compiled by the Federal Deposit Insurance Corporation. Our sample contains US banks tracked yearly for the period 2010–2017, creating an unbalanced panel of year observations. An econometric framework based on nested non‐neutral frontiers was developed to estimate the influence and the decomposition of large lending on the three banks' performance aspects. Moreover, different types of frontiers aiming at the cost and profit sides have been investigated, and the associated elasticities have been calculated. We notice that large lending plays a crucial role in banks' technical efficiency. Variations among different frontier models, type of bank and size, banks' ownership structure, and macroeconomic conditions appear to be present. By considering all capital adequacy asset quality management earnings liquidity parameters, we notice that banks' financial strength affects banks' efficiency. [ABSTRACT FROM AUTHOR]

Three types of payments confront in business dealings viz. advance, cash and credit. A cash payment is ubiquitously practiced, while a credit payment scheme escalates sales and advance payment technique is implemented to avoid cancellation of orders. These are recognized as advance-cash-credit (ACC) payment scheme which is conventional in business transactions. By implicating ACC the aim is to determine optimal pricing and ordering policies. Inventory items observes quadratic demand being sensitive to unit selling price. Promising concavity of the profit function for both selling price and cycle time is posed numerically. Managerial insights are revealed as a concluding note.

Credit from suppliers is an important source of finance for firms. It can sustain firms’ financial flexibility even in periods of downturn. In this study, using a large database of 90,763 Italian firms in the 2015–2021 period, we investigated how local financial development affects the trade-credit policies of SMEs and how this effect is conditioned by the degree of judicial enforcement. Given that trade credit can be a substitute for bank financing, we find that firms make more use of trade credit in developed financial markets. Moreover, we highlight the finding that a higher degree of judicial enforcement, which reinforces the role of contracts in the market, amplifies this effect. Finally, we observe that the COVID-19 crisis has reduced both the positive effect of local financial development and the positive moderating effect of enforcement in the use of trade credit.

Whether green credit promotes heavily polluting enterprises’ energy efficiency is indeed of great practical significance for China to early achieve the “double carbon” goal. This paper uses the green credit guideline issued in 2012 as a natural experiment drawing on the relevant data of Chinese listed enterprises from 2009 to 2020. It adopts a difference-in-differences model to assess the effect of green credit guideline on energy efficiency. The research finds green credit guideline improve the energy efficiency level of pilot enterprises by 0.0141 compared to non-pilot enterprises, and green credit guideline can improve energy efficiency by encouraging enterprises to increase research and development investment. Further, trade credit promotes the positive impact of green credit guideline on the energy efficiency. Moreover, green credit guideline plays a role in stimulating energy efficiency in enterprises in regions with high marketization degree, enterprises with high liquidity ratio and state-owned enterprises.

This work analyses the determinants of trade credit granted and received and the effect of the 2008 financial crisis on it. Using a sample of 96,417 Portuguese SMEs from the non-financial sector for the period 2010–2019, we found that trade credit plays an important role in firms' financing policies. Firms with better access to the credit market act as financial intermediaries and grant financing to firms that have difficulty accessing credit. Moreover, the use of trade credit seems to be a substitute for bank financing. We also found that firms use trade credit as a marketing tool to increase their sales. Finally, we found a slump in credit granted to customers after the 2008 financial crisis, which seems to mimic the contraction in aggregate bank credit.

This paper aims to propose a comprehensive inventory model including pricing, pre-sale incentives, advance sales, trade credit, and carbon tax policies. The novelty of this study lies in its holistic approach to addressing these relevant and practical issues. The major purpose is to determine the optimal pricing, pre-order discount, and replenishment decisions to maximize the total profit under carbon tax policy. Through theoretical analysis, this study develops several theorems to demonstrate properties of optimal solutions and an easy-to-use algorithm to derive optimal solutions. Further, several numerical examples are provided to demonstrate the solution process for different scenarios and the effects of various parameters on optimal alternatives and solutions. This study provides companies management implications to address the challenges posed by the global movement to reduce carbon emissions while maintaining their profitability. [ABSTRACT FROM AUTHOR]

In corporate practice, especially in the current difficult period, we encounter the problem of insolvency or even unwillingness to voluntarily fulfil payment obligations on the part of business partners. The consequence is mutual indebtedness of enterprises. Financial flows stop and the business system can collapse. Trade receivables are one of the risk assets of an enterprise. The success or failure or the future of an enterprise depends on their payment. [ABSTRACT FROM AUTHOR]

Fundamentally, newborn items that are used commercially, such as chicken, fish, and small camel, grow day by day in size and also increase their weight. The seller offers a credit policy to the buyer to increase sales for a particular growing item (fish), and in this paper, it is assumed that the buyer accepts the policy of the trade credit. In this paper, the buyer acquires the newborn items (fish) from the seller and then sells them when the newborn items have increased their size and weight. From this point of view, the present paper reveals a fuzzy-based supply chain model that includes carbon emissions and a permissible delay in payment for defective growing items (fish) under the effect of learning where the demand rate is imprecise in nature and is treated as a triangular fuzzy number. Finally, the buyer's total profit is optimized with respect to the number of newborn items. A numerical example has been presented for the justification of the model. The findings clearly suggest that the presence of trade credit, learning, and a fuzzy environment have an affirmative effect on the ordering policy. The buyer should order more to avoid higher interest charges after the grace period, which eventually increases their profit, while at the same time, it is also beneficial for the buyer to order less to gain the benefit of the trade credit period. The fuzziness theory controls the uncertainty situation of inventory parameters with the help of a de-fuzzified method. The lower and upper deviation of demand affects the total fuzzy profit. The effect of learning gives a positive response concerning the size of the order and the buyer's total fuzzy profit. This means that the decision-maker should be aware of the size of the newborn items, rate of learning, and trade credit period during the supply chain because these directly affect the buyer's total fuzzy profit. The impact of the inventory parameter of this model is presented with the help of sensitivity analysis. [ABSTRACT FROM AUTHOR]

Failure to attract and retain skilled labor exposes firms to skilled labor risk. This paper examines whether and how skilled labor risk affects trade credit offered by suppliers. The empirical analyses show that firms with greater exposure to skilled labor risk are associated with a reduction in trade credit granted by suppliers. It is consistent with the view that the risk arising from the departures of skilled employees is detrimental to firms. A change in employees who are well‐connected with the suppliers undermines firms' bargaining power with their suppliers. Organization capital, managerial ability, and financial constraint are important moderators. [ABSTRACT FROM AUTHOR]

In the current socio-economic situation, the daily demand for essential goods in the business sector is always changing owing to various unavoidable reasons. Choosing the right method for a profitable business has become quite tricky. The proposed study introduces different business strategies based on trade credit, revenue sharing contract, variable demand and production rate. As trade credit is one of the best policies to attract customers, there are two types of models based on it. In the first model, demand depends on average selling price, green degree, and products quality. An additional trade-credit factor is in the second model. However, considering coordination, non-coordination, and revenue sharing contracts, each model has three sub-cases. The main aim is to find the best strategy for the profit maximization of the supply chain members. Green investment, maintenance, and multi-factor dependent demand make the model more sustainable. The global optimization is established theoretically and different propositions are developed. Through numerical experiments, the global optimality is also verified. Some special cases, with a comparative graph, are provided for the validation of these results and to find the best strategy for profit maximization. Finally, some concluding remarks along with future extensions are discussed. [ABSTRACT FROM AUTHOR]

This study identifies and examines the channels through which corporate social responsibility (CSR) impacts firms' access to trade credit. Using a sample of Chinese firms, we identify two channels through which CSR impacts firms' access to trade credit: (i) better CSR performance reduces firms' systematic risk; and (ii) better CSR performance enhances trust from suppliers. We also document that the positive effect that CSR has on firms' access to trade credit is more pronounced in firms with limited access to formal financial resources, i.e., in non‐state‐controlled enterprises, especially those without political connections, and in firms located in regions with a lower level of social trust. Our findings are robust to a series of tests that address the endogeneity issue. Overall, we argue that CSR performance enhances firms' access to trade credit through the channels of systematic risk and trust enhancing. [ABSTRACT FROM AUTHOR]