摘要：This study answers the call of understanding trade credit determinants and consequences in different cultures and economic setups in order to be able to devise policies. Trade credit is affected by two types of factors including firm specific characteristics and macroeconomic conditions. This study tries to investigate the following firm specific variables such as firm size, liquidity, product quality, price discrimination, inventory and sales growth and found them significantly related to trade credit. Gross Domestic Product (GDP) is the variable which is used as macroeconomic variable and found positively related to trade credit. After collecting seven years data from 2005 to 2011 from non-financial firms of Pakistan, we have applied three models named, pooled ordinary least square method, fixed effects m ethod and random effects method for estimation to reach at the conclusion that which model is more appropriate for this study based on panel data. F-test and Hausman test are used to compare the estimated models and they give their justification in favor of fixed effects model.
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