Behaviour of Trade Credit

This paper analyses the trends and features of trade credit of the entire economy, public limited companies, private limited companies and foreign companies in India from 1966-67 to 2000-01, and estimates both time series and panel data models for empirically identifying the determinants of trade credit. The period analysis has also been carried out to gauge the impact of liberalisation on the determinants of trade credit. The paper finds that the government sector has remained a substantial user of trade credit through the entire period. The nature of behaviour of trade credit and the changes in it over the years clearly depend upon the type/ownership of companies.