715
R. R. VAIDYA
fact that the coefficients of profitability are negative,
price discrimination does not seem to be a motive for the
existence of trade credit in India.
Firm’s holdings of liquid assets have a positive influ-
ence on accounts receivable and accounts payable and
net trade credit. Firms with greater access to bank credit
offer less trade credit to their customers. Firms with
more access to bank funds do not pass them on to their
buyers as accounts receivable. On the other hand, firms
with higher bank loans receive more trade credit. The
empirical results on the determinants of trade credit in
India are very different from those for advanced coun-
tries.
5. Acknowledgements
I would like to than k Dr. S. Chandrashekhar and Dr. Na-
veen Srinivasan for helpful discussions and Mr. Ankush
Agarwal for help with the GMM estimation. Mr. Ashish
Singh provided efficient research assistance.
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