Delaying payments after the financial crisis: evidence from EU companies

Isaac Obeng ()

No 2016-66, MENDELU Working Papers in Business and Economics from Mendel University in Brno, Faculty of Business and Economics

Abstract: The paper investigates economic impact of delayed payments caused by liquidity crisis in the European Union. Using micro data sets on financial statements of 54,277 firms for the period of 2005 to 2014 inclusive, we perform panel data analysis by estimating fixed effects regression models with selected macroeconomic shocks. The results show a high variability of late payments during the financial crisis compared to period of relative stable economic situation and late payments is significantly evident across countries under different economic conditions. Additionally, we identify a positive relationship between the response variable, late payments, and firm profitability measured with returns on assets, but a negative relationship with firm total assets as it depends on the speed of collections from receivables. The results suggest delays in payment of invoices beyond the given credit period across the different European Union member countries.

Keywords: late payments; accounts receivable; accounts payable; credit collection; credit period; financial crisis; macroeconomic shocks (search for similar items in EconPapers)
JEL-codes: M21 (search for similar items in EconPapers)
Pages: 34
Date: 2016-12
New Economics Papers: this item is included in nep-eur and nep-sbm
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