The Determinants of Trade Credit Demand: An Empirical Study from Cameroonian Firms

Research on trade credit has been growing in recent years, contributing to our understanding of the phenomenon.However, the main problem is probably the impact of the contingent nature of the payment practices used bycompanies. The purpose of this paper is to address the determinants of trade credit in the Cameroonian context.Based on a sample of 65 Cameroonian companies observed in 2006, the econometric investigations highlight agenuine financial intermediation business close to productive activity. We used a general model incorporatingboth financial variables, transactional and sociocultural in order to estimate the joint effect of all explanatoryvariables on the trade credit which is a kind of investment in business relationship. Logistic regression resultsconfirmed the positive and significant correlation between rationing and trade credit. There is also apparentinfluence of contingency factors on sociocultural commercial time through social capital and ethnicity of tradeand investment partners. Moreover the manager share of capital positively influences the duration of the tradecredit where as the financial motive is one that mostly influences to the companies’ behavior.