Business, Management and Accounting
4 years ago

Rural small businesses re-lend borrowed money, impacting trade credit practices.

RePEc: Research Papers in Economics
AGRIBUSINESS TRADE CREDIT -- A PARADOX
Cole R. Gustafson

Paper Summary

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The article looks at how small rural businesses use trade credit, which is when they borrow money and then lend it to others. The study found that these businesses' debt levels are linked to how much trade credit they give out. Businesses that use computers for cash management and credit services tend to lend more. They get money for lending from mortgages and loans. The study also found that businesses that have more credit options, like loans and credit lines, tend to give out less trade credit. Sales levels, costs, income, and technology use all affect how much trade credit businesses give out.