The effect of trade credit and financial depth on cash holdings

The aim of this study was to evaluate the effect of financial depth on trade credit and cash holdings, In other words, it is checked that there is a relationship between higher level of financial deepening and weak ones. And whether there is a significant difference between the cash held in companies with high and low financial depth or no. This study was a descriptive and correlation. Period of the study is between 2007-2011. The population of the study consisted of all companies listed on the Stock Exchange of Tehran. In the level of confidence of 90, results showed a significant inverse relationship between that trade credit and cash holdings. With an increase in trade credit, firms reduce their cash holdings. The study also showed that among the financial companies listed in Tehran Stock Exchange, there is no significant relationship between the level of cash holdings and financial depth.