Access to Trade Credit by Informal Firms in Ghana: Does Locating in Industrial Cluster and Holding Production/Supply Contract Matter?

Dary, Stanley Kojo

doi:10.4314/gjds.v15i2.8

Cited by 5 publications

(8 citation statements)

References 42 publications

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“…The results show that agricultural trade credit activity, whether advance payment or sales of good on credit (trade credit receivable), is driven by a multiplicity of factors and not a single factor. The finding that holding a preharvest production and sales contract increases the probability of receiving advance payment is consistent with the findings of Dary (2018) in the informal sector in Ghana. In the study, holding supply or production contracts was significantly associated with the receipt of trade credit from buyers.…”

Section: Discussionsupporting

confidence: 87%

Agricultural trade credit: Evidence from smallholder primary producers in Ghana

Dary¹

2022

Journal of Economic and Financial Sciences

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Motivation for the study:The study is motivated by the limited understanding of trade credit activity in smallholder farmer settings in developing countries.Research approach/design and method: It is a cross-sectional quantitative study. It utilised the Ghana Living Standards Survey Round 7 dataset (GLSS 7). The data contains 18 653 observations, and a multinomial logit model (MNL) was employed in the data analysis. Main findings:The results show that trade credit receivable (where farmers extend credit to buyers) is more important relative to advance payment (where farmers receive credit from buyers). The receipt of advance payment is influenced by a farmer holding a preharvest contract, practising monocropping and coming from a smaller household. Age, marital status, literacy, crops sales value, national origin, marketing channels, type of crops and urban location are found to be significant explanatory factors of trade credit supply.Practical/managerial implications: Trade credit, particularly input credit and advance payment, can help primary agricultural producers to mitigate their production credit constraints. However, a well-functioning agribusiness environment that will lower the risks associated with trade credit activity is very crucial. Contribution/value-add:The study extends the frontiers of knowledge in agricultural financing by generating empirical evidence on trade credit activity in smallholder farmer settings in a developing country context.

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Section: Discussionsupporting

confidence: 87%

Agricultural trade credit: Evidence from smallholder primary producers in Ghana

Dary¹

2022

Journal of Economic and Financial Sciences

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“…In order to measure corporate reputation, firm size is used as its proxy (Akabayashi et al , 2005; Lin et al , 2015, 2016; Dary, 2018). The information on total assets (in Rs.…”

Section: Research Methodology and Data Collectionmentioning

confidence: 99%

“…It is widely documented in past research that firm size serves as a conspicuous signal and that large firms are expected to be viewed favorably by stakeholders. Reputation is a hard-to-measure construct and following the approach of Akabayashi et al (2005), Lin et al (2015, 2016) and Dary (2018), firm size is deployed as a proxy for corporate reputation in the current study.…”

Section: Introductionmentioning

confidence: 99%

Edifying role of corporate reputation in new issue market: Indian evidence

Kaur¹,

Singh²

2019

APJBA

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Purpose The purpose of this paper is to examine the relationship between corporate reputation and initial public offering (IPO) underpricing for a sample of 269 IPOs hitting the Indian capital market for the first time during the period ranging from April 1, 2007 to November 8, 2016. Design/methodology/approach The study is based on secondary data (of 269 Indian companies going public) obtained from websites of capital market, Chittorgarh and Securities and Exchange Board of India (from where prospectus of each company was downloaded individually to extract data on financial variables). The study devises the technique of multivariate regression analysis to arrive at the results. Findings The results of the study reveal that corporate reputation serves as a signal to naive investors that assures them of issuer company’s credibility, resulting in lower underpricing. In addition to it, the study also observes the level of gender diversity on Indian boards. It is disappointing to notice low level of female representation on Indian boards and the improvement if any made in the number of female directors on Indian boards is due to provisions of new companies’ act, 2013 that mandates at least one women director on the board of every listed company. Thus, females do not constitute a critical mass on Indian boards. Research limitations/implications The current study scrutinizes the impact of corporate reputation on IPO underpricing only. Furthermore, the study analyzes the underpricing of only book built IPOs. Incorporating both book built and fixed price IPOs could have provided better insights into the issue. Practical implications The study outlines significant implications for managers of issuer company to portray company’s own reputation as a signal instead of showcasing borrowed reputation of external agents at the crucial juncture of going public. Originality/value Many signals portraying quality of the offering are sent by issuer company in public arena to make IPO launch a successful event. Among many such signals like underwriting reputation, auditor reputation, director’s and CEO’s reputation, the corporate audience has started giving more impetus to issuer company’s own reputation. Thus, financial academia witnessed a paradigm shift from external agents reputation to internal agent’s reputation and now the loci of interest has shifted to company’s own reputation. Giving emphasis to corporate reputation seems more relevant in emerging economies like India where naive investors rely on their own judgments while making investment decision who take clue from various signals to infer quality of the offer. It is momentous to observe whether reputation of the company acts as a conspicuous signal to decipher IPO quality. Furthermore, there hardly exists any empirical research directly examining the impact of corporate reputation on IPO underpricing in the Indian context. Hence, the present study is a modest attempt to fill this gap in literature.

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“…For instance, Hermes et al (2012) find a negative impact of trade credit on the switching behaviour of customers in the rice market of Tanzania implying that trade credit acted as a barrier when customers decided to switch to another supplier. However, Dary (2018) reported a positive impact of trade credit on the working capital of informal firms in Ghana. Likewise, Mubashar et al (2018) observed that trade credit relationship was important for short term financing.…”

Section: Introductionmentioning

confidence: 97%

Trade credit from agrochemical vendors as an alternative source of finance for cabbage producers in the Bono East Region of Ghana

Amrago

Mensah

2022

AFR

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PurposeThe purpose of this study is to examine trade credit from agrochemical vendors as an alternative source of finance for cabbage producers in the Bono East Region of Ghana. The determinants of trade credit supply and impact on cabbage producer’s profitability are investigated.Design/methodology/approachThe study sample size is 260. The perception index, probit regression, negative binomial regression and the propensity score matching (PSM) was employed to assess the perception of trade credit, factors influencing trade credit supply and the impact of trade credit supply on the cabbage producer’s profitability and agrochemical vendor’s welfare respectively.FindingsThe perception index analysis revealed that the agrochemical vendors, in general, had a positive perception of trade credit. Different groups of factors influence trade credit supply. Further along, the number of times trade credit was used by the cabbage producers was influenced by several factors. On the PSM result, trade credit use had a significant positive impact on the cabbage producer’s profitability. In detail, all the matching estimations revealed that profitability increased above Gh¢ 4,000.00 (US$ 692.04). Likewise, the robustness check result (Inverse Probability Weighted Regression Adjustment (IPWRA)), was no different from the matching estimations. Generally, the result indicates that the impact of trade credit supply on the agrochemical vendor's welfare using total household expenditure, total savings and income as proxy variables for welfare were positive.Originality/valueTrade credit has encountered less attention in the agricultural finance discourse; however, this study makes an imperative contribution on the same. Specifically, the study reveals the determinants of trade credit supply from agrochemical vendors and a positive impact of trade credit use on the cabbage producer’s profitability, a result which has not been investigated in the trade credit literature.

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Access to Trade Credit by Informal Firms in Ghana: Does Locating in Industrial Cluster and Holding Production/Supply Contract Matter?

Cited by 5 publications

References 42 publications

Agricultural trade credit: Evidence from smallholder primary producers in Ghana

Agricultural trade credit: Evidence from smallholder primary producers in Ghana

Edifying role of corporate reputation in new issue market: Indian evidence

Trade credit from agrochemical vendors as an alternative source of finance for cabbage producers in the Bono East Region of Ghana

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