We study a seller's trade credit provision decision in a situation of repeated contracting with incomplete information over the buyer's payment propensity when the enforceability of formal contracts is uncertain. The payment terms of a transaction are selected in an inter-temporal trade-off...

Trade credit is one of the most important sources of short-term finance in buyer-seller transactions.This paper studies a seller's trade credit provision decision in a situation of repeated contracting withincomplete information over the buyer's ability and willingness of payment compliance when...

This paper analyzes the determinants of trade credit demand and supply in the Tanzanian rice market, using data from individual trade transactions between rice wholesalers and rice retailers. We use a structural modelling approach to disentangle the supply and demand effects that may drive the...

Using a novel dataset of supplier-customer relationships, I develop measures of vertical position of public and private firms in the US economy in order to test trade credit theories. Firms at higher vertical positions have higher profit margins and hold more net trade credit even after...

Firm's social network can bring about competition advantage, while trade credit may reflect the competitiveness of firm's business operations, but it is a pity that there is a lack of studies on the social network and business credit. This paper investigate the influence of different degrees of...

During the transition period from a planned economy to a market economy in the 1990s of China, there was a considerable accrual of deferred payment, and default due to inferior enforcement institutions. This is a very common phenomenon in the transition economies at that time. The Chinese...

We document that industry positions in the product market network – a feature exogenous to individual firms – significantly influences firms' use and extension of trade credit. Specifically, firms in higher centrality customer industries use more trade credit and firms in higher centrality...

We present evidence that restrictions to the set of feasible financial contracts affect buyer - supplier relationships and the organizational form of the firm. We exploit a regulation that restricted the maturity of the trade credit contracts that a large retailer could sign with some of its...

Trade credit plays a very important role in inter-firm transactions. Because formal contracts are often unavailable, it is granted within an ongoing relationship. We characterize the optimal self-enforcing contract, when the ability to repay is unknown to the supplier and the threat of trade...

Trade credit is a widely adopted industry practice. Prior research has focused on how trade credit benefits firms by improving vertical supply chain relationships. This paper offers a novel perspective by examining whether trade credit benefits suppliers through a horizontal channel. Under the...