SME Profitability of Trade Credit during and after a Financial Crisis: Evidence from Korea

• 발행기관: 한국유통과학회
• 저자명: Ohsung KWON Seung Hun HAN Duk Hee LEE
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 7 No.7, 35~47쪽, 전체 13쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2020.07.30

영문 초록

An economic downturn can occurred through unexpected events in various fieldssuch as the subprime mortgage crisis and the outbreak of Coronavirus Disease-2019 (COVID-19). Trade credit is important for small- and medium-sized enterprises (SMEs), especially during a monetary contraction, as it is the last option for firms that lack bank credit. This study aims to determine whether trade credit is profitable for the buyer and supplier firms during and after a financial crisis. We use panel data consisting of all trade credit transactions and financial statements of 5,751 Korean firms during the period 2008–2012. It shows that trade credit is more profitable for both buyers and suppliers in the post-crisis period than during the crisis. Moreover, trade payable is more effective for unconstrained buyers than for constrained buyers. Finally, a mixed strategy is superior to an aggressive or passive strategy of SMEs. The results suggest less profitability of trade credit during a period of contraction and greater sensitivity of the buyer SMEs, emphasizing the idiosyncratic liquidity strategy of each firm. This study can be helpful to develop a strategy of profitable trade credit for SMEs and to establish a policy of managing liquidity for the authority.

목차

1. Introduction

2. Literature Review and Hypothesis Development

3. Data and Variables

4. Empirical Model and Specification

5. Results

6. Conclusion

References

키워드

Trade Credit Financial Crisis Credit Constraints Financial Performance