Interfirm Relationships and Informal Credit in Vietnam
Trading relations in Vietnam's emerging private sector are shaped by two market frictions: the difficulty of locating trading partners and the absence of legal enforcement of contracts. Examining relational contracting, we find that a firm trusts its customer enough to offer credit when the cus...
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| Veröffentlicht in: | The Quarterly journal of economics 1999-11, Vol.114 (4), p.1285-1320 |
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| container_title | The Quarterly journal of economics |
| container_volume | 114 |
| creator | McMillan, John Woodruff, Christopher |
| description | Trading relations in Vietnam's emerging private sector are shaped by two market frictions: the difficulty of locating trading partners and the absence of legal enforcement of contracts. Examining relational contracting, we find that a firm trusts its customer enough to offer credit when the customer finds it hard to locate an alternative supplier. A longer duration of trading relationship is associated with larger credit, as is prior information gathering. Customers identified through business networks receive more credit. These network effects are enduring, suggesting that networks are used to sanction defaulting customers. |
| doi_str_mv | 10.1162/003355399556278 |
| format | Article |
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| source | Jstor Complete Legacy; Oxford University Press Journals All Titles (1996-Current); Periodicals Index Online; EBSCOhost Business Source Complete |
| subjects | Alliances Bank credit Bank loans Business structures Case studies Commercial credit Credit Credit policy Customers Economic models Family members Foreign operations Influence Manufacturing industries Marketing strategies Practice Private sector Social networking Statistical analysis Studies Trade credit Trading companies Usages of trade |
| title | Interfirm Relationships and Informal Credit in Vietnam |
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