The Effect of Government Macroeconomic Policy Uncertainty on the Speed of Trade Credit Adjustment: Generalized Moment Approach (GMM)

Document Type : Original Article

Authors

seyed mojtaba hoseini

Hamed Kargar

Department of Accounting, Payame Noor University, Tehran, Iran

https://doi.org/10.22067/mfe.2025.90997.1479

Abstract

The purpose of this study is to investigate the effect of uncertainty of the government's macroeconomic policies on the speed of adjustment of trade credit . Considering that financing through commercial credit is of great interest to managers of companies due to the high cost of financing through debt, therefore, achieving commercial credit as soon as possible is of great importance. The statistical population of the study is Tehran Stock Exchange and the study period has been since 2011 until 2023‌. By applying the conditions of systematic exclusion, 136 companies have been included in the final screening from the statistical population as the final sample‌. In the present study, the generalized moment approach‌ has been used to test the research hypotheses. Three factors of changes in the inflation rate, exchange rate changes, and changes in the country's economic growth rate were used to identify the uncertainty of macroeconomic policies.
The statistical results showed that the rate of adjustment of trade credit in the sample used in the study is about 75%, which in fact shows the high willingness of companies to use credit financing, and companies actively reduce 75% of the gap between the target and real business credit annually.
Also, changes in the exchange rate, changes in the inflation rate, and changes in the country's economic growth rate affect the rate of adjustment of trade credit. It has positive and meaningful. In fact, with the increase in uncertainty in economic policies, the speed of adjustment of trade credit towards optimal commercial credit will increase, and in this situation, managers will move towards credit financing.

Keywords

Trade Credit Adjustment Rate

Economic Uncertainty

Inflation Rate

Exchange Rate

Economic Growth Rate

Subjects

• Public Sector Economics

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