Credit Redistribution by Listed Manufacturing Firms in Pakistan and the Moderating Role of Financial Depth

Ahmad, Nisar; Nafees, Bilal; Rasheed, Abdul M. A.

doi:10.22547/ber/12.4.1

Cited by 3 publications

(1 citation statement)

References 45 publications

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“…Firms provide trade credit facility to financially constrained businesses and customers in accordance to the credit redistribution hypothesis (Ahmad et al , 2020). Therefore, trade credit provides buyers a motivation to meet their funding needs for spot transactions without making immediate payments (Vaidya, 2011).…”

Section: Introductionmentioning

confidence: 99%

Does trade credit spur performance of the firm: a case study of non-financial firms in Pakistan

Asif

Nisar

2022

JIABR

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Purpose The purpose of this study is to investigate empirically the trade credit financing as antecedents to firm performance in Pakistan, a transition economy having high level of openness in environment using sample data from firms following Sharia principles using Sharia compliance principles. Design/methodology/approach This study investigated the significance of the trade credit behavior in influencing financial performance of nonfinancial firms which have adopted Sharia principles in their business activities by incorporating feasible generalized least square estimator technique on panel data model from 2010 to 2020. The variables data was extracted from the Pakistan Securities Exchange website for the period 2010–2020. Meanwhile, this study has also taken into consideration the role of bank size in shaping the relation under consideration. Findings The statistical outcomes from the used model support the strong impact of the existence of trade credit in determining a firm’s financial performance. Results also highlight that profitable firms with high involvement in trade credit can boost their performance by optimal utilization of trade credit sources. However, the acquisition of bank loans for firms having no operational needs can disturb their financial health and ultimately threaten performance. This relationship is more evident for large-size firms. Practical implications The given analysis suggests the managers from the corporate sector that before making any arrangements for trade credit, they must have to compare the availability of the financing structure from bank as it offers a strong monetary back for any financial imbalance. Originality/value Briefly, to the best of the authors’ knowledge, this study would be the first to address the trade credit behavior keeping in view the sample data from firms following Islamic Shariah principles using SAC quantitative approach. Further, the proven analysis demonstrates novel contribution that efficient use of trade credit (based on Islamic Shariah principles) into business activities might strengthen corporate firms’ financial efficiency.

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Section: Introductionmentioning

confidence: 99%

Does trade credit spur performance of the firm: a case study of non-financial firms in Pakistan

Asif

Nisar

2022

JIABR

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Continuance intention of Fintech Peer-to-Peer (P2P) financing Shariah: Moderation role of brand schematicity and digital financial literacy

Marhadi,

Fathoni,

Setiawan

et al. 2024

Journal of Open Innovation: Technology, Market, and Complexity

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Information technology investment and rural bank performance in Ghana: the moderating role of ICT diffusion and financial development

Annor,

Agyapong,

Robaina

et al. 2024

JEAS

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PurposeThis study sought to examine the interaction between rural bank performance, information and communication technology (ICT) investment, ICT diffusion and financial development.Design/methodology/approachData were sourced from the Association of Rural Banks (ARB) Apex and World Development Indicators (WDI) for the period 2014–2020. A total of 122 rural banks were used for this study. The study adopted the two-step system generalized method of moments (SGMM) estimation technique in assessing the interactions among variables.FindingsThis study found compelling evidence to support the positive effect of ICT investment on banks’ performance (return on asset and net interest margin). Further, ICT diffusion and financial development positively influence banks’ performance. The results show a positive moderating effect exerted by ICT diffusion and financial development on the impact of bank risk (bank stability) and ICT investment on all three performance measures.Originality/valueThe study focuses on the rural banking sector in the Ghanaian economy, compared to related studies that examine the subject matter for commercial banks. The moderating effects of ICT diffusion and financial development are assessed to guide policy on rural banking development in Ghana.

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Credit Redistribution by Listed Manufacturing Firms in Pakistan and the Moderating Role of Financial Depth

Cited by 3 publications

References 45 publications

Does trade credit spur performance of the firm: a case study of non-financial firms in Pakistan

Does trade credit spur performance of the firm: a case study of non-financial firms in Pakistan

Continuance intention of Fintech Peer-to-Peer (P2P) financing Shariah: Moderation role of brand schematicity and digital financial literacy

Information technology investment and rural bank performance in Ghana: the moderating role of ICT diffusion and financial development

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