This paper investigates the short-term debt financing behavior of Korean firms. In particular, the determinants of trade credit demand and supply respectively are examined with emphasis on the key factors such as financial constraint, bargaining power, and internal capital markets. Empirical results show that financial constraint plays a critical role in determining trade credit demand and supply. One of the interesting and unique empirical results of our paper is the positive relationship between financial constraints and trade credit demand and supply. For bargaining power of buyers and suppliers, two potential sources are examined. Product market power is found to be a crucial factor that determines trade credit demand even after the effect of financial constraint is controlled for. Internal capital markets of large business groups also work to influence both trade credit demand and supply of Korean firms. The findings of our paper shed new lights on the rationale for trade credit financing in Korean short-term corporate debt markets.