The Supply of Trade Credit by Brazilian Publicly Traded Firms

Rafael Felipe Schiozer () and João Alberto Peres Brando ()
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Rafael Felipe Schiozer: EAESP/FGV
João Alberto Peres Brando: LCA Consultores

Brazilian Review of Finance, 2011, vol. 9, issue 4, 585-612

Abstract: This paper investigates the determinants of trade credit supply by Brazilian publicly traded companies between the years of 2005 and 2008. International literature (both theoretical and empirical) documents that the main determinants of trade credit supply are the size of the firm and the size of its debt. Both indicate that the availability of resources to the firm is an important factor for the supply of trade credit. In addition, the literature confirms strategic uses of trade credit such as those for price discrimination purposes. The results obtained using a sample of 157 Brazilian companies do not support that size and indebtedness are relevant determinants for trade credit supply, but they confirm the supply of trade credit as a strategic tool for the firms. Additionally we observed a significant decrease in trade credit supply in 2008, the year in which a severe international financial crisis took place.

Keywords: trade credit; short term debt. (search for similar items in EconPapers)
JEL-codes: G3 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:brf:journl:v:9:y:2011:i:4:p:585-612

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