The Determinants of Trade Credits Among Listed Firms in Ghana
Date
2019-08
Authors
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Publisher
University of Ghana
Abstract
The research is geared towards identifying the factors of trade credits amongst listed firms in
Ghana. The data used was in panel form from twenty (20) non-financial firms that are listed on the
Ghana Stock Exchange between 2006 and 2012 to examine the drivers of trade credits. The three
panel regression models used - Pooled Panel Corrected Least Squares model, Random Effects
Model and Prais-Winsten Model - produced results which suggested that size and leverage were
the two main determinants of trade credits extended and trade credits received, while net trade
credit was found to decrease with profitability. The paper recommended that firms must be
cautious in extending trade credits to their customers since high default rates by customers could
affect the short-term solvency of the firm. Also, profitable firms should consider taking trade
credits in order to ease their financial burden in the short term. The lack of trade credit literature
and data limited the paper to the Ghanaian context, thus, generalizing the findings to the West
African sub-region is not possible. The paper, therefore, suggests that a primary study could be
conducted in the future to further understand factors determining trade credits of firms listed and
also SMEs that are in West Africa.
Description
Thesis (MPhil)- University of Ghana
Keywords
Trade Credits, Determinants, Firms, Ghana