The Determinants of Trade Credit: Vietnam Experience

Transcription

1 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V536 The Deerminans of Trade Credi: Vienam Experience Jian-Hsin Chou, Deparmen of Finance, Naional Kaohsiung Firs Universiy of Science and Technology, Taiwan. Min-Sun Horng, Deparmen of Risk Managemen and Insurance, Naional Kaohsiung Firs Universiy of Science and Technology, Taiwan. Wei-Ming Wu, Logisics Managemen, Naional Kaohsiung Firs Universiy of Science and Technology, Taiwan. Nguyen Thi Lan Phuong, Insiue of Business Managemen, Naional Kaohsiung Firs Universiy of Science and Technology, Taiwan. Absrac Trade credi was born as an indispensable par of economic hisory. I marks a grea sep forward in producion and circulaion of currency as well as suppors producion process smoohly. The ongoing developmen of researches on rade credi channel is eloquen evidence for is need. In he sudies of Wesern counries, rade credi has an especially imporan role and can subsiue for bank credi; ye, in developing counries where he financial sysem is sill based on banking sysem such as Vienam, China, rade credi canno compleely subsiue for bank credi. However, by virue of he prominenly ongoing financial crisis and he ighening fiscal policies in recen years, he role of rade credi is increasingly emphasized. In paricular, because Vienam is a ransiion economy, and relies heavily on he banking sysem, he appearance of rade credi is considered one of he effecive measures for business. Therefore, in he period of economic crisis, rade credi received special aenion from firms. The hesis will concenrae on sudying he deerminans of rade credi in lised companies in boh he Hanoi Sock Exchange and Hochiminh Ciy Sock Exchange in Vienam. This sudy found ha firms rely on cash holding and shor-erm deb and own financial sources o provide rade credi. However, because of high ineres rae, herefore firms canno rely on EBIT o exend rade credi for cusomers and rade credi and shor-erm deb can be subsiued. Keywords: Trade Cred Bank Lending, Vienam. 1

2 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V Inroducion In he las wo decades, he world economy had o face he severe financial crises such as: he 1994 Mexican economic crisis, he 1997 Asian financial crisis and he U.S financial crises. They rapidly spread around he world, worsened and hured he global economy hard, specifically he decline in GDP of every single counry. The World Bank repored ha he Vienam s real growh rae fell sharply from 8.5% in 2007 o 6.3% and 5.3% in 2008 and 2009 respecively. As he real GDP has decreased, he unemploymen rae has increased. Also, he repor said ha he inflaion rae of Vienam is abou 22.1% in 2008 and 20.9% in 2011, which is relaively high in he region. Since 2005 he Sae Bank of Vienam has ighened moneary policy, namely he cenral bank raised he refinancing and discoun ineres raes, hereby kep inflaion rae under conrol. The moneary policy was effecive in slowing inflaion down and encouraging economic growh; however, a he heoreical level, he moneary ransmission mechanism sudied ha he igh credi policy made firms relying heavily on bank s loans difficul o borrow money o finance heir business. Over he en years since Vienam s firs sock marke has been launched, Vienam has successfully developed is capial marke and urned hem ino effecive fund o suppor he economy. However, due o he influence of global economic downurn on domesic economy in recen years and Vienam s bank-based financial sysem, he SBV s moneary policy cerainly affeced enerprises abiliy o access capial leading o he impac on performance and invesmen of businesses. Nguyen e al. (2012) suggesed ha Vienam s high-growh firms have heavily relied on bank financing, mosly shor-erm loans. The researchers show ha large and sae-owned enerprises have much easier access o bank loans hanks o he good relaionship wih banks. Nguyen and Ramachandran (2006) explored he capial srucure of boh unlised and lised Vienam s small and medium-sized enerprises (SMEs) have a high reliance on shor-erm financing hrough he banking secor which accouns for 43.9 % of oal deb. According o General Saisics Office of Vienam, Vienam has firms in 2012, including less han 1% of sae-owned enerprises and 97% of small and medium-size enerprises (SMEs). Hence, mos of hem have difficuly in accessing he finance source. Trade credi appears if suppliers allow delayed paymen, so he paymen period of purchase can be exended longer. Since Melzer (1960) firsly poined ou ha, enerprises have had difficuly in accessing bank loans, rade credi would become more imporan source for enerprises o mainain and develop businesses. Thus, nowadays, rade credi is 2

3 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V536 increasingly being considered and paid much aenion by he companies. Obviously, Vienam s enerprises have recognized he imporance and undeniable role of rade credi channel. There are many invesigaions abou rade credi in developed counries, for example, Love e al. (2007) examined how financial crises affeced rade credi in six emerging counries. Hisorically, bank credi channel has played a very imporan role in providing capial for companies, ye mos enerprises find i is hard o access finance, especially in curren period. Thus, rade credi channel is one of he main research sudies in recen years. The paper provides an overview of Vienam s economy and he developmen of he financial sysem. In addiion, he main purposes of he hesis are o explore he role of rade credi in he lised Vienam s firms, and examine how he facors influence on rade credi demand, hereby making rade credi channel he bes way o effecively raise financial source of he firms which suppor he performance and compeiiveness of enerprises. 2. Lieraure Review Trade credi is a kind of credi among firms, which is expressed in he form of goods purchase and sale and delay for paymen. Trade credi is differen from bank credi because objec of rade credi for lending is goods whereas banking lending channel is currency. Therefore, in comparison wih banking lending channel, i has advanage of saving ime and dealing cos. Furhermore, due o is absrac, rade credi is preferable o use. I does no have o publicize heir aciviies o he banks. Trade credi is clearly superior o bank credi o raise business capial and is very vial for firms which are lack of funds or have difficuly in accessing bank credi. On he sudy of rade cred Schwarz (1974), he raised a quesion ha Why do nonfinancial firms commonly paricipae in he process of financial inermediaion by exending credi o heir cusomers? Also, he same quesion was asked by Peersen and Rajan (1994) Why do indusrial firms exend rade credi when more specialized financial insiuions such as banks could provide finance? Many auhors sugges ha rade credi is a criical source of shor-erm exernal finance of sellers providing o heir cusomers (see Melze 1960, Schwarz 1974, Smih 1987, Peersen and Rajan 1994 ec.). Elliehausen and Wolken (1993) indicaed ha 87% of firms in U.S offered rade credi. Anov and Aanasova (2007) argued ha he invesmen in accouns receivable is over 34 percen of oal asses in Spanish enerprises. The issues o clarify are ha: Why do no suppliers place he excess funds ino banks or make an invesmen plan? Why do no cusomers ake loans from 3

4 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V536 banks or financial insiuions? Wha are he advanages of sellers o sell rade credi and cusomers o ake rade credi? Absoluely, suppliers have heir own moivaions o offer rade credi o heir cusomers. According o Schwarz (1974), here are wo reasons for offering rade credi. They are financial moivaion and ransacions coss moivaion, bu he auhor only emphasized on financial moivaion. Smih (1987) argued ha along wih financial moivaion here also exiss pricing moivaion. Accordingly, in his hesis, I focus on hree main moivaions: financing moivaion, ransacions cos moivaion, operaing and sraegy moivaion o invesigae rade credi channel. There are a subsanial number of sudies have invesigaed he deerminans of rade credi. However, each economy has disincive facors which affec rade credi. They may be he differences in financial srucure or characerisics of he economy, or even he governmen policy and legislaion ec. This sudy will presen some differen poins of views on he facors ha concern rade credi. Specially, I make use of wo main researches: including he deerminans of rade credi of SMEs in Europe, and he deerminans of rade credi in ransacion counries. The former sudy paid aenion on hree moivaions: operaional, commercial and financial perspecives of rade credi while by means of financial and commercial perspecives he laer one no only focused on he deerminan of rade credi bu also presened he analysis of he role and he effec of rade credi in ransacion counries. Firsly, in Table 1, i indicaes deerminans of rade credi of 47,197 SMEs in Europe (including Belgium, Finland, France, Greece, Spain, Sweden and UK) during he period of by Garcia-Teruel and Marinez-Solano (2010),. They demonsraed ha accouns receivable over asses are 39.28% in Spain, 35.42% in Belgium, 28.58% in UK, 25.70% in Sweden, 19.18% in Finland, and accouns payable over asses are 28.52% in France and 13.17% in Finland. I exhibied he differences of level abou rade credi among hese counries as well as proved ha rade credi has been played a crucial role in firms. 4

5 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V536 Table 1: The deerminans of rade credi of SMEs in Europe ( ) Naion Deerminans of accouns receivable Deerminans of accouns payable Belgium Finland France Greece Spain Sweden UK Secor 5. FCOST Agriculure Mining 6. PGROWTH Manufacuring Consrucion 7. NGROWTH Reail rade Wholesale rade 8. TURN Transpor and public Services Variables Define Variables Define 1. LSIZE The size 1. LSIZE The size 2. LAGE The age of he The age of he 2. LAGE company in years company in years 3. CFLOW The cash flows Posiive cash flows 3. PCFLOW generaed by firm generaed 4. STLEV The shor-erm Negaive cash 4. NCFLOW financing flows generaed The cos of 5. STLEV ouside financing Shor-erm finance The posiive sales Cos exernal 6. FCOST growh financing The negaive sales Posiive sales 7. PGROWTH growh growh The asses 8. NGROWTH urnover Negaive growh 9. TURN Asses urnover 10. GPROF Gross profi margin Source: García-Teruel and Marínez-Solano (2010) Secondly, referring o he deerminan of rade credi in ransacion counries, his hesis realized ha here are some common characerisics beween hese counries and Vienam. Mos of he firms have a limied access o bank cred excep for large firms. Furhermore, he financial marke has been developed a early sage, and securiies marke has been recenly esablished, so he financial operaion sill remains relaively poorly. Accordingly, i finds hard for firms o raise capial effecively. Also, he aricle suggesed ha he rade credi would be used o preven enerprise bankrupcy. Table 2 shows he deerminans of rade credi of 9300 companies in nine Cenral and Easern European Counries over he period Table 2: The deerminans of rade credi in ransiion counries ( ) Naion Deermianas of accouns receivable Deerminans of accouns payable Bulgaria Variables Define Variables Define Czech Republic Esonia 1. ASSETS Toal asses 1. ASEETS Toal asses Hungary 2. PROFIT The raio of 2. profi PROFIT The raio of profi Lihuania Lavia before urnover ax o before urnover ax o 3. GROWTH The growh rae 3. GROWTH of The growh rae of 5

6 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V536 Poland urover urnover Romania 4. LEVERAGE The raio 4. EQUITY of The raio of equiy Slovakia shor-erm bank o oal asses Secor Wholesale rade 5. INDUSTRY loans o oal asses 5. INDUSTRY Reail rade Manufacuring Building Agriculure Oher services Source: Delannay and Weill (2004) 3. Theory and Hypoheses Trade credi exis on boh sides of he annual balance shee. In he sellers balance shee, i is considered as accouns receivable while in buyers balance shee rade credi is accouns payable. Ginanei and Burkar (2004) said ha Wha you sell is wha you lend ; in oher words, boh accouns receivable and accouns payable are wo main dependen variables for a company. In his aricle, he Ginanei and Burkar (2004) suggess some hypoheses based on he heories in chaper wo o presen he closed relaionship beween he wo dependen variables and oher independen variables in financial saemen. This aricle based on he moivaions for he use of rade credi ha menioned in chaper 2 o deermine he affecing he rade credi. Based on financial moivaion, his sudy uses hree independen variables including firm s size, shor-erm deb and equiy. Based on ransacions coss moivaion, wo independen variables include invenory and cash are deermined. Earnings before ineres and ax (EBIT) is defined o as operaing prof herefore based on operaion moivaion, i is referred o as a independen variable. According o sraegy moivaion, ne sales are defined as an independen variable. Firsly, we esimae he impac of CASH variables on accoun receivable. The variable cash is measured by cash and cash equivalen. Wu e al. (2011) found ha boh accouns receivable and accouns payable had inensive influence on firms cash holdings. In fac, accouns receivable is being used as a cash alernaive. Therefore, here will be a negaive correlaion beween cash holdings and accouns receivable. Wu e al. (2011) invesigaed he links beween rade credi and cash holdings in Chinese lised firms. They found ha firms hold addiional $0.71of cash for every $1 of credi payable. In realiy, rade credi is inercompany loans, bu i is also used o keep some cash o pay for upcoming credi 6

7 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V536 obligaions. Wherefore, we should expec a posiive relaionship beween cash and accouns payable. H1: There will be a negaive correlaion beween cash holdings and accouns receivable. H2: We should expec a posiive relaionship beween cash holdings and accouns payable. The esablishmen of HOSE and HNX may have changed he credi behavior of he firms. The variable EQUITY is defined as oal shareholders equiy which is oal asses minus oal liabiliies; in oher word i is he amoun of cash a company own. Firms can depend on heir own access o finance heir cusomers, so i may be a posiive signal o accoun receivables. H3: There will be a posiive relaionship beween equiy and accouns receivable. Myers (1984) developed he pecking order heory o explain he facors affecing he capial srucure of individual firm. This heory is based on he cos of budgeary sources o decide he financial choices. Inernal funds are he firs opion of companies because hey do no have o pay any coss and ineress. Secondly, i is he deb issuance. Finally, equiy issuance is he mos expensive cos. Accordingly, firms prefer o uilize rade credi raher han equiy issuance. This sudy examined abou lised company in Vienam, herefore, he increasing of equiy will increase of firm s size. As he hesis menioned above, large firms have advanages o ake rade credi form heir cusomers. Posiive relaionship may be expeced. H4: Posiive link beween equiy and accouns payable may be observed. According o Peersen and Rajan (1997), rade credi is no only regarded as a ool o promoe sales bu also presens he qualiy of firms goods. In he financial saemen, NET SALES of a firm is generaed afer he deducion of reurns (ne sales revenue is equal gross sales revenue minus sale reurn or discouns). Therefore, i be should expeced he posiive relaion beween ne sales and accouns receivable. H5: I should be expeced he posiive relaion beween ne sales and accouns receivable. The variable INVENTORY perhaps has a negaive influence on accouns receivable. Maue e al. (2011) has poined ou ha holding invenories make firms bear opporuniy coss and carrying coss. Suppliers, in addiion, face wih he uncerainy of demand. Therefore, suppliers exend rade credi o avoid paying more coss. H6: There will be a negaive correlaion beween invenory and accouns receivable. In financial saemen, invenory is an asse, accouns payable is called he curren liabiliy. The financial balance shee shows he equal of asses and liabiliies, hus he asses increase so does he liabiliies. 7

8 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V536 H7: There will be a posiive correlaion beween he accouns payable and invenory. SIZE is measured by oal asses. Long e al. (1993), Peersen and Rajan (1997) employed oal asses o measure he size of firms. I is easy for large firms wih heir repuaion o receive he suppor from banks. As menioned in he heory of chaper 2, large firms which ac like financial inermediaries have disribued financial resources o cusomers, so i is generally considered as a posiive link beween size and accouns receivable. Melzer (1960) firsly sudied abou he relaionship beween rade credi and firms size. He showed ha small firms which do build a repuaion and marke posiion ofen provide rade credi in order o ensure he qualiy of goods. As a resul, large firms also have he opporuniy o receive rade credi. Thus, his sudy should examine a posiive signal beween size and accouns payable. H8: The correlaion can be posiive beween size and accouns receivable. H9: The correlaion can be posiive beween size and accouns payable. In erms of shor-erm deb (STD), suppliers offering rade credi is acually viewed as he second layer of financial inermediaries. I is proved ha firms wih shor-erm bank loans would prefer o provide rade credi for oher firms, so a posiive relaionship may be observed. On oher hand, hidden cos of rade credi seems more expensive han he cos of bank credi. Hence, small businesses which have a limied access o bank credi will receive more rade credi from suppliers. We would observe a negaive signal beween STD wih accouns payable. H10: There will be a posiive correlaion beween shor-erm deb and accouns receivable H11: There will be a negaive relaionship beween STD and accouns payable. Finally, i is he variable EBIT which is earnings before ax and ineress. Earnings before ax and ineress is called operaing prof so i measure a firm s profi before pay ineres and income ax are expended. The main purpose of every enerprise is o maximize value, so enhancing higher ne profi margin is he driving force o offer rade credi. Firms wih high profiabiliy are able o be he poenial cusomers of banks, hus high profi is considered as a posiive signal for he banks. Consequenly, he relaionship of profi and accouns payable is regarded as a negaive signal. H12: There is a significanly posiive correlaion beween EBIT and accouns receivable. H13: There is a negaive relaionship of EBIT and accouns payable. 8

9 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V Daa and Mehodology 4.1 Daa This paper uses he daa from he annual balance shees of 300 Vienamese non-financial lised companies in boh Hanoi Sock Exchange (HNX) and Hochiminh Ciy Sock Exchange (HOSE) in he period from 2005 o The source of he daa is exraced from Daasream. 4.2 Mehodology The paper uses wo main dependen variables: accouns payable and accouns receivable and some oher independen variables above o specify how he deerminans affec rade credi demand and supply in firm i a ime. Regression models are presened as equaion (1) and equaion (2). AR SIZE 5 CASH 1 STD 6 EBIT 2 INVENTORY 7 EQUITY 3 NETSALES 4 (1) AP STD 5 CASH 1 EBIT INVENTORY 6 2 EQUITY 3 SIZE 4 (2) 5. Empirical Resuls 5.1 Pearson s Correlaion Coefficien In his sudy, Pearson s correlaion coefficien is used o analyze he relaionship beween he independen variables. The correlaion exiss beween wo variables wih values ranging from +1 o -1. If value is in he range from 0 o 0.3 or -0.3, i shows a weak posiive or negaive linear relaionship, and hen values from 0.3 o 0.7 or from -0.3 o -0.7 indicae a moderae posiive or negaive linear relaionship, he oher values beween 0.7 and 1.0 or -0.7 and -1.0 shows a srong posiive or negaive linear relaionship. Table 3 shows he values range beween abou 0.4 and 0.9. The correlaion coefficien beween EBIT and INVENTORY is As a resul, i indicaes a moderae posiive link beween hese wo independen variables. The highes correlaion coefficien is of SIZE and STD which shows he very srong relaionship beween SIZE and STD. I can be seen ha he correlaion of he whole variables in his sudy is very srong posiive because here are no negaive relaionships a all. 9

10 CCOUNTS AYABLE CCOUNTS ECEIVABLE ACCOUNT S PAYABLE 1 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V536 ACCOUNT S,882 ** 1 RECEIVAB LE IZE,875 **,900 ** 1 ASH,783 **,806 **,814 ** 1 Table 3: Correlaion Marix SIZE CASH EBIT INVENTO BIT,671 **,600 **,671 **,600 ** 1 NVENTORY,729 **,743 **,875 **,558 **,473 ** 1 QUITY,801 **,845 **,876 **,789 **,666 **,698 ** 1 have posiive effec on accouns receivable. I can be seen ha hese resuls suppor he hypoheses. As 10 RY EQUITY ET SALES,878 **,897 **,867 **,843 **,688 **,643 **,862 ** 1 HORT-TER DEBT NET SALES SHORT-TERM,753 **,840 **,905 **,657 **,507 **,890 **,781 **,773 ** Empirical Resuls DEBT In his paper, we use he regression analysis o invesigae he deerminans of rade credi in Vienam over he period from 2005 o Accordingly, here are resuls of accouns receivable and accouns payable regression models as Table 4 and Table 5. Table 4 demonsraes he relaionship beween he dependen variable accouns receivable and independen variables: cash, EBIT, equiy, ne sales, STD, size, invenory. The resuls show ha all independen variables are significan o accouns receivable; especially variables such as cash, equiy, ne sales, STD, size are posiive significance o accouns receivable. Firsly, he paper hypohesizes ha cash is negaive significance o accouns receivable, bu he resul does no suppor hese hypohesis. The daa indicaes ha one uni increase of cash subjec will lead o he amoun of accouns receivable increasing by According o he heories menioned in chaper wo, accouns receivable is considered shor-erm asses o suppliers. Therefore, accouns receivable also is regarded as a subsiuion for cash holding. In he usual manner, i is possible for firms depending on financial or deb o expand rade credi for cusomers. However, here are sill some firms exending rade credi because of operaing moivaion. Wih relaion o he above resuls, independen variables such as equiy, ne sales and STD

11 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V536 calculaed, one uni increase of each independen variable is equivalen o accouns receivable by 0.478, and uni respecively. Thus, hese resuls are consisen wih his sudy and expecaion heories. However, we can see ha here is a huge negaive link beween EBIT and accouns receivable. This can be explained by high ineres rae and high ax which every firm have o pay. Firms have used financial source from banks o provide rade cred so firms have o employ EBIT o cover high ineres rae. Firm s size has a significanly posiive effec on accouns receivable. This finding is also suppor he heory offered by Melzer (1960) and he hypohesis expeced in he sudy. I is easier for large firms o ge access o financial source from banks han small firms because hey have large asses o ensure, so large firms usually ac as financial inermediaries o redisribue financial resources hrough rade credi. Independen Receivable Accouns Table 4: Resuls of he deerminans of accouns receivable Expeced Relaion Coefficien P-value CASH ( ) EBIT ( ) EQUITY ( ) NETSALES ( ) STD ( ) SIZE ( ) INVENTORY ( ) R-square Adjused 2 R Noes: CASH is measured by cash and cash equivalen. EBIT is earnings before ax and ineress. EQUITY is defined as oal shareholders equiy. NET SALES is equal gross sales revenue minus sale reurn or discouns. SIZE is measured by oal asses. STD includes all deb having an original mauriy of one year or less. INVENTORY is measured as oal amoun of goods or maerials in sore. The resuls of he deerminans for accouns payable are presened in Table 5. I esimaes he impacs of cash, EBIT, equiy, STD, size, invenory on accouns payable. According o he Table 5-3, cash has a posiive effec on accouns payable. This provides suppor o he hypohesis of he relaionship beween cash and accouns payable. Firms hold cash because of is cerainly ongoing obligaions. 11

12 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V536 The resuls repor EBIT presen a posiive sign and an essenial influence on accouns payable while STD is significanly negaive wih accouns payable. I indicaes ha STD and rade credi can be subsiued. According o rade credi heory, hidden cos in rade credi is considerably more expensive han bank ineres rae. However, Vienam is currenly in he economic siuaion of high inflaion and high ineres rae, enerprises end o selec rade credi as an alernaive choice. The resul of he coefficien of equiy and size indicaes a posiive sign o accouns payable. Raising one uni of equiy and size will lead o he increase in accoun payable by and respecively. I can be seen ha in relaion wih accouns payable, here are mainly posiive correlaions. Hence, he hypoheses in his sudy are srongly suppored. Table 5: Resuls of he deerminans of accouns payable Independen accouns Expeced Coefficien P-value payable Relaion CASH ( ) EBIT ( ) EQUITY ( ) STD ( ) SIZE ( ) INVENTORY ( ) R-square Adjused 2 R Noes: CASH is measured by cash and cash equivalen. EBIT is earnings before ax and ineress. EQUITY is defined as oal shareholders equiy. SIZE is measured by oal asses. STD includes all deb having an original mauriy of one year or less. INVENTORY is measured as oal amoun of goods or maerials in sore. 6. Conclusions This sudy invesigaes he deerminans of rade credi in 300 lised companies in Vienam sock marke over he period from 2005 o As a resul, here are boh posiive correlaions and negaive correlaions beween independen variables and accouns receivable as well as accouns payable. I can be seen ha rade credi is no only a financial source which suppliers make use of o suppor heir cusomers bu also a promoional ool boosing oal sales growh. Also, i found ha firms wih laid-up cash, shor-erm deb end o exend rade credi. However, EBIT is variable which does no suppor accouns receivable. I can be explained ha high ineres rae (eg. The lending 12

13 Proceedings of he Second Asia-Pacific Conference on Global Business, Economics, Finance and Social Sciences (AP15Vienam Conference) ISBN: Danang, Vienam, July 2015 Paper ID: V536 ineres rae is 17% in 2007 in Vienam) makes firms under pressure o pay ineres. Accordingly, firms prefer o receive rade credi from supplier raher han banks. Besides, he scale of enerprise is a posiive signal o boh accouns receivable and accouns payable. In paricular, large firms usually redisribue financial resources hrough rade credi; also hey concurrenly use heir power o receive rade credi from small firms. Reference Anov, D., & Aanasova, C. V. (2007). Trade Credi Financing: How Expensive is i Really? Working Papers Series. Available a SSRN. Delannay, A.-F., & Weill, L. (2004). The Deerminans of Trade Credi in Transiion Counries. Economics of Planning, 37(3-4), Elliehausen, G. E., & Wolken, J. D. (1993). The Demand for Trade Credi: An Invesigaion of Moivaions for Trade Credi Use by Small Businesses. Working Paper. Available a SSRN. García-Teruel, P. J., & Marínez-Solano, P. (2010). Deerminans of rade credi: A comparaive sudy of European SMEs. Inernaional Small Business Journal, 28(3), Melzer, A. H. (1960). Mercanile Cred Moneary Policy, and Size of Firms. Review of Economics and Saisics, 42(4), Nguyen, D. T., Diaz-Rainey, I., & Gregoriou, A. (2012). Financial Developmen and he Deerminans of Capial Srucure in Vienam. Working Papers Series. Nguyen, T. D. K., & Ramachandran, N. (2006). Capial Srucure in Small and Medium- sized Enerprises: The Case of Vienam. Asean Economic Bullein, 23(2), Peersen, M. A, &Rajan, R. G. (1994). The Benefis of Lending Relaionships: Evidence from Small Business Daa. The Journal of Finance, 49(1), Peersen, M. A., & Rajan, R. G. (1997). Trade Credi: Theories and Evidence. Review of Financial Sudies, 10(3), Schwarz, R. A. (1974). An Economic Model of Trade Credi. Journal of Financial and Quaniaive Analysis, 9(4), Smih, J. K. (1987). Trade Credi and Informaion Asymmery. Journal of Finnance, 42(4), Wu, W., Ru O., & Wu, C. (2011). Trade Cred Cash Holdings, and Financial Deepening: Evidence from a Transiional Economy. Journal of Banking & Finance, 36(11),