Impacts of Credit Sales Policies on Profitability of Listed Vietnamese Stocks

Abstract

This study examines the effect of credit policy on the profitability of listed companies in Vietnam. The study uses data from 633 non-financial companies listed on the Ho Chi Minh City Stock Exchange and the Hanoi Stock Exchange in Vietnam from 2009 to 2019. Based on panel data regression models with fixed effects, random effects and instrumental variable (IV) regression, the study shows that trade credit influences the profitability of Vietnamese listed companies. Specifically, when companies increase the use of credit policy, it will increase the company's profitability. In addition, the study also found an inverted U-shaped relationship between trade credit and profitability, leading to the existence of an optimal level of receivables that maximizes the profitability of the company, and there was a difference when implementing trade credit among industry groups in Vietnam.