ISSN: 2222-6990
Open access
The survival of the economy depends on the continuity of supply of goods and services to the society it needs. This supply is discharged by the firms working in it (the economy). In this discharging journey, every firm goes through certain regular operating activities such as purchasing supplies (raw materials, business inputs), carrying out business operations/activities with the help of human resources, running factory operations, executing marketing operations, etc. Discharging all these activities demand the payments on time and/or in time and on regular basis. The timely and regular payments may be financed via a non-traditional mode of financing, i.e. by the encashment of trade receivables through factoring. One of these prioritized payments is the payment of wages and salaries, since the presence of human resources is the must in an organization, even in a highly automated or robotic firm. This study finds the impact of financing the payment of salaries and wages by the encashment of trade receivables through factoring on the long-term financial growth of the firms that use this kind of financing in Bangladesh which is significant and insignificant statistically. In the study, the financing impact has been measured in the traditional proxies such as return on assets (ROA), return on equity (ROE), current ratio (CR) including two deep-rooted growth measurement tools: internal growth rate (IGR) and sustainable growth rate (SGR). The empirical models used in the study to measure the effect are of multiple regression. The models used the panel data consisting of 5400 firm year observations of 2014 – 2019. The study has got linkage with some underpinning theories in finance such as Liquidity Preference Theory, Pecking Order Theory, and M-M theory.
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