The Behavior Of Supply And Demand Of Trade Credit

This research study has an effort to capture the behavior of trade credit(TC)supply and demand in non-financial firms of Pakistan and explain the behavior of trade credit on supply and demand sides.Therefore,we selected the textile sector of Pakistan and the data used in this research is related to the firms listed on Karachi Stock Exchange(KSE).The working is applied to the Panel data which consisted of time series as well as the cross-sectional data of the textile sector in Pakistan from the year 2006-12.To test the hypothesis of the study,we applied descriptive,regression and correlation model along with fixed effect test using the latest version of E.Views software.The results of the study described that there is a significant relationship between the several determents of TC supply and demand.It was found that the independent variables such as current asset,cash & bank balance,gross profit,current liabilities,shareholders equity,inventory and tax expense are significantly related to TC supply.While total assets,gross profit,and inventory are the significant determinants of TC demand.The findings of this study add the valuable contribution to the literature by finding the determinants of TC supply and demand in the context of textile sector of Pakistan.The results are useful for non-financial firms listed on Karachi Stock Exchange.The firms can derive useful information regarding TC to customers before making any strategy to manage the supply and demand of TC.