The evolution of trade credit: new evidence from developed versus developing countries

Michael Machokoto, Daniel Gyimah, Boulis Maher Ibrahim

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)
33 Downloads (Pure)


Using a large sample of listed firms from 72 countries over the period 1990–2019, we document a markeddecrease in trade credit that is more pronounced for firms in developed economies relative to those inemerging economies. We find little evidence that firm characteristics drive this trend, as their relationwith trade credit remains relatively stable throughout the sample period. We test several competingpropositions and find that the listing decade, institutional factors, and financial development explainthe downward trajectory in trade credit. We also report diminishing returns to trade credit that arehigher in the US and other developed economies than in emerging economies. These results are robustto alternative definitions of trade credit and to controlling for several firm-specific and macroeconomicfactors.
Original languageEnglish
Pages (from-to)857-912
Number of pages56
JournalReview of Quantitative Finance and Accounting
Issue number3
Early online date11 May 2022
Publication statusPublished - Oct 2022


  • Trade credit
  • Time series
  • Emerging economies
  • Firm age
  • Employment

ASJC Scopus subject areas

  • Accounting
  • General Business,Management and Accounting
  • Finance


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