LAUSR

Abstract This paper examines how a borrower's growth affects trade credit decisions. An analysis of publicly traded firm data from nine developed economies indicates that trade credit increases with growth. In some cases, this increase is driven by conditions related to liquidity. Exploring the relationship under macroeconomic conditions reveals evidence of an increase in trade credit financing in slow-moving economies and in times of adverse borrowing conditions. The findings indicate strong support from suppliers under circumstances that can be explained by informational symmetry and the increasing market power of growing firms.