Research On The Different Use Of Trade Credit Level In Enterprises

Trade credit is a significant financing tool for Chinese enterprises,which affects the development of enterprises and the allocation efficiency of financial resources.The main forms of trade credit are accounts payable and bills payable and the proportion of them to the total assets of enterprises increases year by year.How to manage the level of trade credit effectively and reasonably,making the enterprises not reduce reputation due to excessive nor waste economic resources because of insufficient use,becoming an important indicator of business operations management capabilities.Therefore,the research on the influencing factors of trade credit and the dynamic adjustment process of the target trade credit is a significant subject.This paper takes 2012 as the IPO year,using IPO in the first three years and the last three years as the research objectives respectively,that is 2009 to 2015.First of all,we analyse the difference usage on the public and private trade credit from the internal and external factors.The results show that age is an important factor affecting the trade credit demand of enterprises,as well as size,short-term debt and profitability.We further verifies that public firms will reduce the demand of trade credit,indicating that the listing is another important factor affecting trade credit.Based on the analysis of the influencing factors of trade credit,we establish the partial adjustment model,indicating that both public firms and private firms will adjust their trade credit level.At the same time,we compare different adjustment speeds in public and private firms,and in different deviation degree.It turns out that whenever the trade credit is above or below target level,the trade credit adjustment speeds of private firms are faster than public firms.Finally,we explore the external factor that affects trade credit,namely monetary policy,and compare the difference in the use of trade credit both in public and private firms during the tightening period of monetary policy.The result shows that,the use of trade credit in private firms is higher than public firms during the tightening period of monetary policy.This research on the internal and external factors and adjustment speed of trade credit can provide reference for enterprises,so that they can plan for their own,helping them balance the relationship between trade credit and enterprises value better and improve the management ability of trade credit.