Impact of Profitability on Trade Credit Supply of Pakistani Firms: A Moderating Role of Financial Distress

  • Sadaf Noreen University of Lahore, Pakistan
  • Ahsan Riaz Government College University Faisalabad, Pakistan https://orcid.org/0000-0002-8436-3241
  • Nimra Riaz Government College University Faisalabad, Pakistan
  • Nadeem Nazir Government Post-graduate college Samanabad Faisalabad, Pakistan
  • Nadia Sadiq Government College University Faisalabad, Pakistan
DOI: https://doi.org/10.29145/jqm.0702.03
Keywords: Trade Credit, Firm Profitability, Financial Distress, Pakistan Stock Exchange, Panel Data

Abstract

This research aims to elucidate the relationship between trade credit (supply) and the profitability/growth of non-financial companies in Pakistan. The 386 unbalanced panels listed in Pakistan Stock Exchange between 2004 and 2017 are analyzed through GMM with 3976 annual observations. The research indicated the insignificant relationship between profitability and growth with the net trade credit of non-financial companies. On the other hand, net trade credit positively correlates with return on equity, company size, and age. Financial distress has a significant moderating effect on net trade credit, and firms need to increase return on equity and growth to overcome financial distress.

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Author Biographies

Sadaf Noreen, University of Lahore, Pakistan

Ms. Sadaf Noreen is a graduate student at the University of Lahore, Pakistan pursuing a Ph.D. degree in corporate finance. Currently, she serves as Visiting Lecturer at the University of Education, Lahore, Pakistan. She has vast teaching and research experience consisting of more than six years in Accounting and Finance. She has the author of many research articles.

Ahsan Riaz, Government College University Faisalabad, Pakistan

Dr. Ahsan Riaz is graduated from Asia Pacific University of Technology & Innovation, Malaysia holding a Ph.D. degree in corporate finance with distinction by having merit award. Currently, Dr.  Ahsan Riaz serves as Assistant Professor at Lyallpur Business School GC University Faisalabad, Pakistan. He has vast teaching and research experience of more than 12 years in Accounting and Finance. He has the author of many research articles. He is an editorial board member of the Asian Institute of Research of journal Economics and Business Quarterly Reviews. He is also a reviewer of many reputable journals like Asian Social Science, International Business Research, and the International Journal of Economics and Finance of the Canadian Center of Science and Education (CCSE). He is an expert in quantitative analysis and professional Eviews and Sos-Viewer trainer.

Nimra Riaz, Government College University Faisalabad, Pakistan

Ms. Nimra Riaz completed her degree in m.phil finance at Lyallpur Business School at GC University Faisalabad, Pakistan. Currently, she is serving as Lecturer at the Government College of women, Faisalabad, Pakistan. She has teaching and research experience of more than four years in Accounting and Finance

Nadeem Nazir, Government Post-graduate college Samanabad Faisalabad, Pakistan

Dr. Nadeem Nazir is graduated from Lyallpur Business School GC University Faisalabad, Pakistan holding a Ph.D. degree in finance. Currently, Dr. Nadeem Nazir is serving as Assistant Professor at Government Post-graduate college Samanabad Faisalabad, Pakistan. He has vast teaching and research experience of more than 30 years in Accounting and Finance.

Nadia Sadiq, Government College University Faisalabad, Pakistan

Ms. Nadia Sadiq is a visiting Lecturer at Lyallpur Business School GC University Faisalabad, Pakistan in Economics. Currently, she is serving as Lecturer in Economics on the disposal of the Punjab government in Pakistan. She has teaching and research experience consisting more than ten years in the field of Economics

Published
2023-12-27
How to Cite
Noreen, S., Riaz, A., Riaz, N., Nazir, N., & Sadiq, N. (2023). Impact of Profitability on Trade Credit Supply of Pakistani Firms: A Moderating Role of Financial Distress. Journal of Quantitative Methods, 7(2). https://doi.org/10.29145/jqm.0702.03
Issue
Vol 7 No 2 (2023): Winter
Section
Articles

Copyright (c) 2023 Sadaf Noreen, Ahsan Riaz, Nimra Riaz, Nadeem Nazir, Nadia Sadiq

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