Skip to main content
Kent Academic Repository

Trade credit and corporate growth

Tingbani, Ishmael, Afrifa, Godfred Adjapong, Tauringana, Venancio, Ntim, Collins (2022) Trade credit and corporate growth. International Journal of Finance & Economics, 29 (1). pp. 206-228. ISSN 1076-9307. (doi:10.1002/ijfe.2683) (KAR id:97078)


While the underlying causal linkage between trade credit and corporate growth has mainly been explored, the primary factors that channel the relationship are limited. This article hypothesises a nonlinear relationship between trade credit and corporate growth due to the existing theoretical arguments on the benefit and cost of using suppliers' credit by corporations to enhance growth. Based on a panel of 23,023 non-financial companies from the United Kingdom over a 10-year period, evidence from this study reveals a non-linear (concave) relation between trade credit and corporate growth: positive for low trade credit received and negative for high credit received. We also find trade credit to be sensitive to financial crisis, financial constraints and growth strategy. The predictability is stronger during a financial crisis, among financially constrained corporations and corporations pursuing an aggressive growth strategy. We also find growth to be higher in firms that move closer to achieving an optimal credit level. This relationship holds for both the above-and below-optimal deviations. These findings have implications for a more balanced and nuanced view of trade credit management.

Item Type: Article
DOI/Identification number: 10.1002/ijfe.2683
Uncontrolled keywords: Employment growth, financial constraint, financial crisis and corporate growth, monetary contraction, trade credit, Trade payables
Subjects: H Social Sciences > HF Commerce > HF5351 Business
Divisions: Divisions > Kent Business School - Division > Department of Accounting and Finance
Funders: University of Kent (
Depositing User: Godfred Afrifa
Date Deposited: 23 Sep 2022 11:45 UTC
Last Modified: 01 Feb 2024 16:13 UTC
Resource URI: (The current URI for this page, for reference purposes)

University of Kent Author Information

Afrifa, Godfred Adjapong.

Creator's ORCID:
CReDIT Contributor Roles:
  • Depositors only (login required):

Total unique views for this document in KAR since July 2020. For more details click on the image.