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Makale Özeti:
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This study answers the call of understanding trade credit determinants and consequences in
different cultures and economic setups in order to be able to devise policies. Trade credit is affected
by two types of factors including firm specific characteristics and macroeconomic conditions. This
study tries to investigate the following firm specific variables such as firm size, liquidity, product
quality, price discrimination, inventory and sales growth and found them significantly related to
trade credit. Gross Domestic Product (GDP) is the variable which is used as macroeconomic
variable and found positively related to trade credit. After collecting seven years data from 2005 to
2011 from non-financial firms of Pakistan, we have applied three models named, pooled ordinary
least square method, fixed effects m ethod and random effects method for estimation to reach at
the conclusion that which model is more appropriate for this study based on panel data. F-test and
Hausman test are used to compare the estimated models and they give their justification in favor of
fixed effects model.
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