Does green innovation facilitate firms' access to trade credit?

Employing a large sample of Chinese firms, this study examined the influence of corporate green innovation on firms' access to trade credit. The results indicated a positive association between green innovation and firms' capability to access trade credit, suggesting that suppliers value firms' green innovation capabilities. This relationship was strengthened after the implementation of the new Environmental Protection Law (EPL) in 2015, which enhanced the value of green innovation. The findings remained robust to several robustness tests. The results suggest that green innovation helps firms access trade credit through better environmental, social, and governance (ESG) scores and more state subsidy channels and plays a more pronounced role for financially constrained firms, non-state-owned enterprises, firms with lower bargaining power, and firms located in regions with better intellectual property rights protections. Green innovation is valuable for future corporate growth and shareholder value. Overall, this study reveals the value of green innovation through informal corporate financing.

COVID-19 Pandemic and Corporate Liquidity: The Role of SOEs' Trade Credit Response

Although state-owned enterprises are associated with less efficiency and lead to resource misallocation, they may have stabilizing effect in face of a crisis. Exploiting the COVID-19 pandemic as a natural experiment, we study the role of firm ownership in trade credit provision and find robust evidence that SOEs increase their trade credit to downstream firms more than non-SOEs after the outbreak of the pandemic. Moreover, we explore the underlying mechanism and find that better financing ability and multitask of the SOEs contribute to greater trade credit during the pandemic, and the latter plays a more active role. Further analyses show that SOEs' advantage in trade credit extension is more pronounced in industries with higher external financial dependence and provinces with a higher level of government involvement, suggesting that SOEs might have greater comparative advantage in screening due to its involvements in local economy during crisis periods. Our paper provides new insights into the real effects of SOEs on the economy.

ESG ratings and trade credit: inverted U-shaped moderating role of information transparency and executives with overseas backgrounds

In the context of carbon peaking and carbon-neutral target, enterprises need to adjust their resource allocation and practice environmental, social, and governance (ESG) activities. Previous literature ignores the resources and costs that enterprises may consume to improve ESG ratings, leading to an unclear relationship between ESG ratings and trade credit. We investigate how ESG ratings affect trade credit using the inverted U-shaped (U-shaped) moderating effect regression model. The result shows that ESG ratings have an inverted U-shaped relationship with trade credit. Information transparency moderates the curvilinear relationship between ESG ratings and trade credit, with higher information transparency flattening the shape of the inverted U-shaped curve and moving the inflection point to the left. Executives with overseas backgrounds significantly moderate the inverted U-shaped relationship between ESG ratings and trade credit. Executives with overseas backgrounds flatten the inverted U-shaped relationship, and the inflection point shifts to the right. Overall, our findings show that higher ESG ratings do not help enterprises to expand trade credit in emerging market countries. Higher ESG ratings consume more corporate resources and are more likely to become a tool for management self-interest.

Do the trade credit influence firm performance in agro-industry? Evidence from Thailand

This paper aims to examine the relationship between trade credit and corporate performance. Empirical evidence on the impact of trade credit investment on firm performance remains unclear. For agro firms, the implications of this relationship have not been thoroughly discussed. Using a panel sample consisting of publicly listed agro firms in Thailand for 2001-2020. The sample set consists of 51 Thai-listed firms with 708 firm-year observations. We employ panel ordinary least squares (OLS) regressions and GMM regressions to obtain the estimation results. We find that going to invest in trade credit increases operating performance significantly, which is what the commercial, financing, and transaction theories of trade credit predicted would happen. Furthermore, cost-benefit analysis should serve as a guide for firms' trade credit investment decisions. In particular, firms should be aware of the extra cost of trade credit investment and weigh it against the benefits of improved performance.

Access to trade credit and its impact on the use of European Union (EU) approved pesticides among smallholder cocoa farmers in Ondo State, Nigeria

The use of EU-approved pesticides is low in Ondo State, especially among smallholder cocoa farmers. Perhaps, trade credit, being one of the most important sources of credit, would increase the use of EU-approved pesticides among smallholder cocoa farmers. Therefore, this study investigated access to trade credit and its impact on the use of EU-approved pesticides among smallholder cocoa farmers in Ondo State. A multistage sampling procedure was used to select 240 smallholder cocoa farmers for the study. Data were analyzed using descriptive statistics, a double hurdle regression model, and an endogenous switching probit regression model. The descriptive results showed that on average, respondents were 44 years of age, 16 years of farming experience, 7 people for household size, and 2.70 hectares for farm size. Most of the respondents obtain trade credit from their respective farmers' cooperatives (82%), while others obtain trade credit from input suppliers (73%) and cocoa exporters (66%). It was also noted that only 35% (84/240) of the smallholder cocoa farmers use EU-approved pesticides on their cocoa farms. A majority (73.4%) of the respondents used the Ridomin 66WP gold (Cuprous Oxide + metalaxyl-M). Others use Esiom 150SL (Acetamiprid) (37.5%), Funguran-OH (Copper hydroxide) (49.1%), touch down fort (Glyphosate) (47.5%), and Actara 25WG (Thiamethoxan) (25%). The result further showed that age, gender, household size, farm size, cooperative membership, and assets significantly influenced the probability of a farmer receiving trade credit. However, gender, household size, year of farming experience, cooperative membership, and assets are statistically significant in determining the amount of trade credit obtained by the farmers. The first stage of the ESPM revealed that gender, age, household size, farm size, and cooperative membership significantly influence the smallholder cocoa farmers' access to trade credit. While the second stage of the ESPM revealed that significant use of EU-approved pesticides among users of trade credit is affected by age, household size, education, access to extension services, and cooperative membership. Meanwhile, among non-users of trade credit, variables such as age, farming experience, farm size, land ownership, and cooperative membership significantly affect the use of EU-approved pesticides. After controlling for observed and unobserved covariates, the study concluded that access to trade credit positively impacts the use of EU- approved pesticides among smallholder cocoa farmers. It was concluded that policy strategies aimed at increasing the use of EU-approved pesticides among small cocoa farmers should take into account trade credit.

Firm-level trade credit responses to COVID-19-induced monetary and fiscal policies: International evidence

This paper provides preliminary evidence of the effects of fiscal and monetary policies designed to mitigate and contain the adverse economic impacts of COVID-19 on supplier-customer relationships during the first two quarters of 2020. We compare the impacts of various intervention policies on corporate trade credit for a sample of 14,623 firm-quarter observations, representing 56 countries, after controlling for quarter-, country-, industry-, and firm-fixed effects. We find that, overall, the monetary interventions are associated with lower levels of trade credit, while fiscal interventions increase the use of trade credit. Our results suggest that trade credit is lower in periods of less-restrictive bank credit. This finding has important policy implications for governments as they attempt to help financially constrained businesses survive the pandemic.

Innovative Approach of EOQ Structure for Decaying Items with Time Sensitive Demand, Cash- Discount, Shortages and Permissible Delay in Payments

Growing business process and rising aggressive conditions are encouraged to use the inventory control scheme and components in an ideal way. Cash discount and permissible delay are beneficial for vendor and buyer both. This study considers an EOQ model through demand rate depends on the time. A lower or higher time leads to lower or higher demand after feedback vice versa. In this paper deterioration, cash- discount, shortages and permissible delay are also considered. Mathematical models are discussed under four different states of affair. Solution method is given for finding the finest answer. The main aim is to maximize total profit. Numerical examples are provided for all four dissimilar situations. Optimal values with strictures are calculated to analyze the sensitivity investigation of optimal strategy concerning the parameters of the system. It is revealed that the total income is concave by means of cycle time.

Trade credit research before and after the global financial crisis of 2008 - A bibliometric overview

This study presents an overview of the state-of-the-art in trade credit research by examining 1191 publications between 1955 and 2019. Applying bibliometrics and econometrics, the study compares the extant research across the three sub-domains of banking and finance, production and operations, and accounting. Findings suggest that the financial emergency in the global market had resulted in a watershed moment in trade credit research. About 69 % of the literature was found to have emerged after the global economic crisis of 2008. A network analysis grouped the trade credit articles into four major and four minor clusters. The banking and financing cluster exhibited the highest growth followed by the production and operation cluster while the perspectives of accounting are yet to gain traction. Conversely, reputation of the publishing hub, empirical studies, and the production and operational dimensions of the research positively and significantly influence citations. Alongside a thorough introspection, the study also provides new areas to direct the course of future research.

Two retailer-supplier supply chain models with default risk under trade credit policy

The purpose of the paper is to formulate two uncooperative replenishment models with demand and default risk which are the functions of the trade credit period, i.e., a Nash equilibrium model and a supplier-Stackelberg model. Firstly, we present the optimal results of decentralized decision and centralized decision without trade credit. Secondly, we derive the existence and uniqueness conditions of the optimal solutions under the two games, respectively. Moreover, we present a set of theorems and corollary to determine the optimal solutions. Finally, we provide an example and sensitivity analysis to illustrate the proposed strategy and optimal solutions. Sensitivity analysis reveals that the total profits of supply chain under the two games both are better than the results under the centralized decision only if the optimal trade credit period isn’t too short. It also reveals that the size of trade credit period, demand, retailer’s profit and supplier’s profit have strong relationship with the increasing demand coefficient, wholesale price, default risk coefficient and production cost. The major contribution of the paper is that we comprehensively compare between the results of decentralized decision and centralized decision without trade credit, Nash equilibrium and supplier-Stackelberg models with trade credit, and obtain some interesting managerial insights and practical implications.