ISSN: 1019-7044
Volume XLV (3 & 4) & XLVI (1 & 2), September 2020 - June 2021
Published: April 2022
Pages:
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This study is an initiative to calculate the cost of trade credit of Small and Medium Enterprises (SMEs) and examine the effect of the ‘accessibility of SMEs to institutional credit’ and the ‘financial crisis of SMEs’ on the trade credit used by SMEs. For this study, the cross-sectional primary data have been used. Some financial techniques and tools such as “model of calculating the cost of trade credit” and “time value of money” have been used to analyze the data. Moreover, Kruskal-Wallis test and logistic regression model have been used to test the hypotheses. The study has found that the average cost of trade credit is 67.74 percent. It indicates that the SMEs have to pay Tk. 67.74 annually as a cost of using trade credit of Tk. 100 which is higher that the any other sources of external financing. The cost of trade credit for small enterprises is higher than the medium enterprises. But the variation of the average cost of trade credit among the sectors of business and the nature of business is not statistically significant. The statistical analysis tells that the ‘accessibility of SMEs to institutional credit’ and the ‘financial crisis of SMEs’ are not determining factors of trade credit used by SMEs. Therefore, the study suggests that the SMEs should be more careful to use the trade credit as it is very costly.
Keywords: Small and Medium Enterprises (SMEs) , Cost , Trade Credit , Financing , Financial Crisis
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