This empirical paper uses a panel of about half a million observations for French firms across economic sectors to investigate how the type of inventories can affect firms' incentives to use trade credit. We find evidence that trade credit extended is influenced by the extent to which firms hold different types of inventories. Moreover, we show that the strength of the relationship varies across economic sectors. Finally, we find that as buyers process goods, the sellers' incentives to extend trade credit diminish.
Mateut, S., Mizen, P., & Ziane, Y. (2015). Inventory composition and trade credit. International Review of Financial Analysis, 42, 434-446. doi:10.1016/j.irfa.2015.09.008