Bank Credits and Their Influence on Accounts Receivable: The Case of the Forestry Products Sector in Turkey

Abstract

The leverage of bank credit may result in different consequences on current assets. As the accounting procedures report financial credit in two significant terms, short-term bank credit and long-term bank credit, the study tries to reveal the effect of those liabilities on the level of accounts receivable in the forestry products sub-sector in Turkey. The study examines a set of long-term data including current ratio, cash and cash equivalents ratio, and short-term inventories ratio as control variables to test two different models in which either short or long-term bank credit consequence is predicted. The results confirm that time constraints of bank credits have both significant roles on the level of account receivables. However, the significance is barely higher for the effect of long-term bank credit. Therefore, we conclude that the businesses of the forestry products sector in Turkey should also be sensitive primarily on the level of their long-term bank credit along with the level of short-term bank credit amongst the liabilities in balancing the accumulation of accounts receivable. Thus, businesses of the sector would better consider the level of bank credits in the conditions of risky, non-performing or accumulating accounts receivable.