Acta Univ. Agric. Silvic. Mendelianae Brun. 2020, 68, 775-796
Published online 2020-08-30

The Impact of Trade Credit Investment on Manufacturing Firms' Profitability: Evidence from Vietnam

Duong Phuong Thao Pham, Thi Cam Ha Huynh

School of Finance, University of Economics Ho Chi Minh City, 59C Nguyen Dinh Chieu, Ward 6, District 3, Ho Chi Minh City, Vietnam

Received March 18, 2020
Accepted August 6, 2020

The aim of this study is to examine the effect that trade credit investment has on firms' profitability. The characteristics of this relationship have not been dealt with in depth for manufacturing firms. We use panel data for a total of 227 Vietnamese publicly listed manufacturing firms for the period 2005–2017. Different econometric estimation techniques such as the feasible generalized least squares, fixed effects and random effects and different calculation of firm performance such as non market-based measure (return on assets) and market-based measure (Tobin's q) are employed to validate the consistent results. The robust results confirm a statistically significant inverted U-shaped relationship between trade credit investment and profitability.


This research is funded by University of Economics Ho Chi Minh City, Vietnam. We are grateful to the two anonymous peer reviewers for their constructive comments.


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