Trade Credit in Europe: 'It is All Down to Culture'

55 Pages Posted: 15 Jul 2016

See all articles by Yacine Belghitar

Yacine Belghitar

Cranfield University - School of Management

Cesario Mateus

Aalborg University Business School

Andrea Moro

Cranfield University - School of Management

Date Written: January 14, 2016

Abstract

This article examines trade credit decision in Western Europe using a comprehensive sample of 182,296 SMEs for the period 2003-2013. We develop a theoretical framework based on information asymmetry, financial distress and the role of country informal institutions. The results show that country cultural norms play a key role in explaining trade credit differences in a European region that share common formal institutional characteristics. We find that in countries with high power distance, high individualism, high masculinity, and high uncertainty avoidance rely more on trade credit. These results are robust to a range of alternative variable measurements, conventional control variables and specifications.

Keywords: Trade Credit, Culture, SMEs, Bank Credit

Suggested Citation

Belghitar, Yacine and Mateus, Cesario and Moro, Andrea, Trade Credit in Europe: 'It is All Down to Culture' (January 14, 2016). Available at SSRN: https://ssrn.com/abstract=2809112 or http://dx.doi.org/10.2139/ssrn.2809112

Yacine Belghitar (Contact Author)

Cranfield University - School of Management ( email )

Bedfordshire, MK43 0AL
United Kingdom

HOME PAGE: http://www.cranfield.ac.uk/som/people/dr-yacine-belghitar-822715

Cesario Mateus

Aalborg University Business School ( email )

Aalborg
Denmark

Andrea Moro

Cranfield University - School of Management ( email )

Bedfordshire, MK43 0AL
United Kingdom

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