A Contingent Claims Analysis of Trade Credit

Paul D. Adams, Steve B. Wyatt and Yong H. Kim

Financial Management, 1992, vol. 21, issue 3

Abstract: We investigate trade credit decisions using a framework which reflects capital market equilibrium via contingent claims analysis. We approach the valuation of trade credit from the perspective of straightforward evaluation of risky debt. By modeling the trade credit limit decision in this way, optimal decisions on the part of the seller and buyer are assumed. This paper has two purposes. First, to develop a theoretically plausible credit-valuation framework. Second, to illustrate the proper use of this framework for effectively setting credit limits.

Date: 1992
References: Add references at CitEc
Citations: View citations in EconPapers (3)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fma:fmanag:adams92

Access Statistics for this article

Financial Management is currently edited by Bill Christie

More articles in Financial Management from Financial Management Association University of South Florida 4202 E. Fowler Ave. COBA #3331 Tampa, FL 33620. Contact information at EDIRC.
Bibliographic data for series maintained by Courtney Connors ( this e-mail address is bad, please contact ).