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Memorias de investigación
Conferences:
The Role of Trade Credit in the Spanish Agrogood Industry
Year:2008
Research Areas
  • Agricultural policy
Information
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. Paper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 43861.
International
Si
43861 (http://www.eaae.org)
Entity
European Association of Agricultural Economists
Entity Nationality
Sin Pais
Place
Ghent, Belgium
Participants
  • Autor: Alberto Garrido Colmenero (UPM)
Research Group, Departaments and Institutes related
  • Creador: Centro o Instituto I+D+i: Centro de Estudios e Investigación para la Gestión de Riesgos Agrarios Medioambientales (CEIGRAM)
  • Departamento: Economía y Ciencias Sociales Agrarias
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