Trade Credit and Bank Credit in Conditions of Inflation: Evidences for Publicly Traded Nonfinancial Enterprises in Bulgaria
Trade Credit and Bank Credit in Conditions of Inflation: Evidences for Publicly Traded Nonfinancial Enterprises in Bulgaria

Author(s): Galya Taseva
Subject(s): Economy, National Economy, Business Economy / Management, Financial Markets
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: trade credit; bank credit; supplier financing
Summary/Abstract: The purpose of the article is to examine the relationship between financing with trade credit and bank credit in the conditions of inflation in Bulgaria. The analysis in the article is based on data for 43 non-financial publicly traded enterprises in Bulgaria for the period 2018 - 2022. The results of the study show that with the sharp acceleration of inflation in Bulgaria in 2022, increase sharp also the ratio Trade credit / Total liabilities to banks and non-bank financial institutions. The research show that trade credit and bank credit are complementary sources of financing for publicly traded enterprises in Bulgaria in the period 2018 - 2021. With the acceleration of inflation in 2022, which is accompanied by a serious increase in the interest costs of companies, the nature of the relationship between trade credit and bank credit is changing. For 2021 and 2022, a statistically significant positive correlation is established between the ratio Interest expenses / Total liabilities to banks and other financial institutions and the ratio Trade credit / Credit from banks and non-bank financial institutions. As inflation accelerates, firms are looking to raise more interest-free financing from their suppliers to ease the burden of rising interest costs on bank loans.

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