Trade Credit as a Markovian Decision Process with an Infinite Planning Horizon
The trade credit process is modelled as a series of stochastic cash flows with recursive decisions over an infinite planning horizon. A closed form solution is obtained for the value of extending credit, and a function is derived for the upper bound on acceptable default risk. Conditions for optimal...
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| Veröffentlicht in: | Quarterly journal of business and economics 1992-10, Vol.31 (4), p.51-79 |
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| container_title | Quarterly journal of business and economics |
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| creator | Fewings, David R. |
| description | The trade credit process is modelled as a series of stochastic cash flows with recursive decisions over an infinite planning horizon. A closed form solution is obtained for the value of extending credit, and a function is derived for the upper bound on acceptable default risk. Conditions for optimal myopic credit decisions are examined, and the value of extending trade credit is analyzed for sensitivity to function parameters. |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0747-5535 |
| ispartof | Quarterly journal of business and economics, 1992-10, Vol.31 (4), p.51-79 |
| issn | 0747-5535 1939-8123 2327-8250 |
| language | eng |
| recordid | cdi_proquest_journals_194738255 |
| source | Periodicals Index Online; JSTOR |
| subjects | Accounts receivable Analysis Cash flow Cash sales Credit Credit decisions Credit risk Customers Decision-making Economic models Financial transactions Functions Invoices Markov analysis Markov processes Trade credit Vendors |
| title | Trade Credit as a Markovian Decision Process with an Infinite Planning Horizon |
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