Trade Credit and Financial Sustainability of Enterprises
Trade Credit and Financial Sustainability of Enterprises

Author(s): Galya Taseva
Subject(s): Economy, Business Economy / Management
Published by: Институт за икономически изследвания при Българска академия на науките
Summary/Abstract: The aim of the article is to examine the importance of trade credit for the financial stability of enterprises in Bulgaria and specifically for the risk of falling into a state of liquidity shortage and inability to cover obligations to creditors in different economic conditions. The analysis is based on panel data for 43 non-financial enterprises with different main activities in the field of production and services, which were traded on the Bulgarian Stock Exchange during the period 2018 - 2024. Non-parametric analysis of variance revealed a statistically significant difference between the degree of liquidity and the risk of bankruptcy of companies that are net creditors and net debtors of trade credit. Companies that are net debtors of trade credit are financially more vulnerable. The results of the study show a unidirectional change in trade receivables and payables, with an extremely strong convergence of the average values of receivables and payables to trade counterparties observed since 2022 and even an almost complete equalization of the values in 2024. This is the result of an increasing desire to hedge trade credit risk and the desire of companies to be prepared for upcoming economic shocks.

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