Trade credit in an emerging market: evidence from Kuwaiti firms

Yomna Abdulla

Afro-Asian Journal of Finance and Accounting, 2022, vol. 12, issue 2, 216-231

Abstract: We investigate the trade credit policy in Kuwaiti firms during the period 2011-2016. Specifically, we examine the impact of the decline in oil prices on the level of trade credit and on the relationship between trade credit and firms' profitability. The findings show that the decline in oil prices had no significant impact on the level of trade credit or the relationship between trade credit and profitability. We find that cashflow, cash holdings, current assets, short-term debt and size are the main determinants of trade credit. The results also show that the level of trade credit has a negative impact on a firm's profitability and is more pronounced in financially unconstrained firms.

Keywords: trade credit; emerging markets; profitability; accounts payable; working capital management; oil prices; Gulf Cooperation Council; GCC; corporate finance; financial constraints; crisis. (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ids:afasfa:v:12:y:2022:i:2:p:216-231

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