COVID-19 and trade credit speed of adjustment

Haowen Luo

Finance Research Letters, 2022, vol. 47, issue PA

Abstract: This paper examines the extent to which COVID-19 affects corporate trade credit policy. We find that COVID-19 significantly accelerates US firms’ convergency speed toward the target trade credit. In addition, we find that firms subject to higher ex-ante operational risk tend to adjust trade credit toward the target faster than those with fewer risk exposures. Overall, our evidence is consistent with the risk avoidance explanation for trade credit policy changes in the presence of adverse shocks.

Keywords: COVID-19; Target trade credit; Speed of adjustment (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005043

DOI: 10.1016/j.frl.2021.102541

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