TY - JOUR
T1 - Bank Credit, Trade Credit and Growth of Listed Agricultural Firms in Vietnam
AU - Le, Ninh Khuong
AU - Bui, Anh Tuan
AU - Phan, Tu Anh
N1 - Publisher Copyright:
© Copyright: The Author(s) This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (https://creativecommons.org/licenses/by-nc/4.0/) which permits unrestricted non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited.
Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.
PY - 2020
Y1 - 2020
N2 - This paper investigates the relationships between bank credit and trade credit with profit of 130 agricultural firms listed on Vietnam’s stock exchanges during the period 2008-2014. Using the GMM approach, the paper reveals inverted-U shaped (∩) relationships between bank credit and trade credit with profit. Specifically, the optimal threshold of bank credit and trade credit to total assets of the firms are 0.4173 and 0.2425, respectively. The findings mean that if the ratio of bank credit to total assets exceeds the benchmark of 0.4173, firms should consider restructuring debts to get them back to the benchmark. To do so, firms should withdraw from those business fields that are not of their profession, in addition to liquiditizing unused assets to repay debts and not using short-term credit to invest in long-term projects. Firms may use trade credit wisely when other sources of finance are lacking. In concrete terms, firms can increase trade credit use if the ratio of trade credit to total assets is below 0.2425. Yet, if this ratio goes beyond this benchmark, firms should get back to this benchmark, e.g., keeping a suitable amount of inventory. The implications of this study is to boost firm growth in the proposed way.
AB - This paper investigates the relationships between bank credit and trade credit with profit of 130 agricultural firms listed on Vietnam’s stock exchanges during the period 2008-2014. Using the GMM approach, the paper reveals inverted-U shaped (∩) relationships between bank credit and trade credit with profit. Specifically, the optimal threshold of bank credit and trade credit to total assets of the firms are 0.4173 and 0.2425, respectively. The findings mean that if the ratio of bank credit to total assets exceeds the benchmark of 0.4173, firms should consider restructuring debts to get them back to the benchmark. To do so, firms should withdraw from those business fields that are not of their profession, in addition to liquiditizing unused assets to repay debts and not using short-term credit to invest in long-term projects. Firms may use trade credit wisely when other sources of finance are lacking. In concrete terms, firms can increase trade credit use if the ratio of trade credit to total assets is below 0.2425. Yet, if this ratio goes beyond this benchmark, firms should get back to this benchmark, e.g., keeping a suitable amount of inventory. The implications of this study is to boost firm growth in the proposed way.
KW - Bank Credit
KW - Growth
KW - Listed Firm
KW - Trade Credit
KW - Vietnam
UR - http://www.scopus.com/inward/record.url?scp=85097224873&partnerID=8YFLogxK
UR - https://doi.org/10.25905/21425103.v1
U2 - 10.13106/jafeb.2020.vol7.no11.303
DO - 10.13106/jafeb.2020.vol7.no11.303
M3 - Article
AN - SCOPUS:85097224873
VL - 7
SP - 303
EP - 314
JO - Journal of Asian Finance, Economics and Business
JF - Journal of Asian Finance, Economics and Business
SN - 2288-4637
IS - 11
ER -