The purpose of this paper is to investigate the impact of the recent credit supply shocks on the behaviour of trade
credit (accounts payable) and trade debtor (accounts receivable) of UK private firms. The fixed effect model is used in
this study to investigate these issues. The results indicate that private firm’s short term bank leverage is adversely
affected by the recent credit supply shock. In addition we have found that during the crises period UK private firms do
not increase trade credit. The results further highlight that these firms also reduced the extension of trade credit to their
customer. In addition, the trade credit behaviour of both manufacturing and service sector firms is adversely affected by
exogenous credit contraction. It is the first study that investigates the behaviour of trade credit, trade debtor of the UK
private firms during the recent crisis period.