The trade credit in the Spanish agrofood industry

Alarcón Lorenzo, Silverio (2011). The trade credit in the Spanish agrofood industry. "Mediterranean Journal of Economics, Agriculture and Environment (New Medit)", v. 10 (n. 2); pp. 51-57. ISSN 1594-5685.

Description

Title: The trade credit in the Spanish agrofood industry
Author/s:
  • Alarcón Lorenzo, Silverio
Item Type: Article
Título de Revista/Publicación: Mediterranean Journal of Economics, Agriculture and Environment (New Medit)
Date: June 2011
Volume: 10
Subjects:
Faculty: E.T.S.I. Agrónomos (UPM) [antigua denominación]
Department: Economía y Ciencias Sociales Agrarias [hasta 2014]
Creative Commons Licenses: Recognition - No derivative works - Non commercial

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Abstract

Selling on credit is rather frequent in Mediterranean countries. Its generalized use can lead to excessive enlargements of the payment periods and consequently can deteriorate the profitability of firms. In spite of the relevance of this problem there are few empirical researches. This work intends to fill this gap and to shed light on the factors related to the extension of trade credit. In the theoretical and empirical literature, different motives have been proposed to explain this issue: 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 of the Spanish agrofood industry 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. Other factors with positive relationships are short-term bank debts and accounts payable. These findings are consistent with commercial motives, rather than a pure financial view, in the sense that financial distressed producers extend trade credit as a way of promoting their products and in turn increasing their sales.

More information

Item ID: 15344
DC Identifier: http://oa.upm.es/15344/
OAI Identifier: oai:oa.upm.es:15344
Official URL: http://newmedit.iamb.it/edizioni_new_medit,229,229,2011,97,383,the-trade-credit-in-the-spanish-agro-food-industry.htm
Deposited by: Memoria Investigacion
Deposited on: 12 Jun 2013 13:29
Last Modified: 21 Apr 2016 15:24
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