CHAPTER 2
Trade Credit: Theory and Empirical Evidence
Introduction
Trade credit is characterized by different business processes during a firm’s life, from startup to maturity. Multiple theories and types of empirical evidence have been proposed to interpret this multifaceted phenomenon and explore its evolution in a changing business environment. It is therefore an active research area for academics and a key business driver for professionals. According to traditional theory, the supply and demand for trade credit are determined by economic sector characteristics (see Trade Credit across Economic Sectors section) and firm characteristics, with multiple motivations for recourse to trade credit (see Corporate Characteristics and Trade Credit Motivation ...
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