The effect of 2008 financial crisis on trade credit: empirical evidences from Taiwan, China, Hong Kong, Japan and Korea

[[abstract]]According to Love et al. (2007), most of firms in Mexico, Malaysia, Indonesia, Philippines and Thailand take the trade credit as the short-term financing resources during the 1994 Mexican peso devaluation and 1997 East Asian Financial Crisis. The 2008 financial crisis caused a global liquidity shortage. This paper investigates the effect of the 2008 financial crisis on companies’ trade credit using five main East Asian countries as our research samples, which include Taiwan, China, Hong Kong, Japan and Korea. To investigate factors affecting trade credit, this study sets the accounts receivable/payable as the evaluation factors for trade credit and deduces two study themes, namely, financial crisis and financial vulnerability. The findings demonstrate that the financial crisis had a negative influence on the amount of trade credit use in these five countries. Further, the firms with a more vulnerable financial position before the crisis are more likely to reduce the supply on trade credit