Determinants of Trade Credit Policy: Evidence from Manufacturing Firms Listed in Vietnam

Abstract

Trade credit is vital for businesses, serving as a crucial strategy that helps enterprises expand their market presence, boost revenue, and pursue profits. Nevertheless, it also poses considerable risks to businesses. Through an analysis of a sample comprising 292 publicly listed manufacturing companies in the Vietnamese stock market during the 2012-2021 period, and utilizing a panel data regression model, the research findings reveal that factors such as provisions for doubtful accounts, debt ratios, and liquidity are positively correlated with trade credit policies. Notably, the introduction of provisions for doubtful accounts as a new variable significantly influences trade credit policies. Conversely, there is a negative impact on trade credit policies concerning revenue growth.