INVESTIGATION OF TRADE CREDIT DEMAND PATTERNS IN EFFECT WITH FIRM-BANK RELATIONSHIP: A PANEL DATA APPROACH

This research paper investigates the behavior of non-financial firms towards trade credit demand in a developing economy while focusing on firm-bank relationship. We have analyzed data from 2005 to 2011 for 220 listed non-financial firms, including manufacturing and services industries. This study reveals that joint board of directors of a firm and a commercial bank leads to easy availability of bank loan and thus decrease firm`s demand for trade credit. Moreover, some control variables like fixed assets, inventory and size has been found significant for trade credit demand.