Value chain perspective on the use of trade credit during the 2006–2015 business cycle–evidence from Eurozone SMEs

Perttu Hautala, Harri Lorentz*, Juuso Töyli

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

1 Citation (Scopus)

Abstract

In order to understand whether advanced chain spanning coordination is needed within the framework of supply chain finance, we address the question on how a business cycle affects the use of trade credit in different tiers of the value chain in SMEs. In order to address this research question, we utilise the panel regression analysis on a dataset comprising of a longitudinal sample of SME companies in the Eurozone over a period of 10 years from 2006 until 2015. We conclude that trade credit is counter-cyclical in nature, the business cycle has affected the value chain tiers with differing severity with manufacturing end of the value chain being the most affected, and there may exist a propagating liquidity shock in the value chain. Therefore, we suggest that supply chain spanning coordination of financing and trade credit is an essential area in advanced supply chain finance.

Original languageEnglish
Pages (from-to)204-227
Number of pages24
JournalInternational Journal of Logistics Research and Applications
Volume22
Issue number2
DOIs
Publication statusPublished - 4 Mar 2019
MoE publication typeA1 Journal article-refereed

Keywords

  • business cycle
  • panel regression model
  • payment times by country
  • supply chain finance
  • Trade credit

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