Interfirm Relationships and Informal Credit in Vietnam
نویسنده
چکیده
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 nd that a rm trusts its customer enough to offer credit when the customer nds it hard to locate an alternative supplier. A longer duration of trading relationship is associatedwith larger credit, as is prior information gathering. Customers identied through business networks receive more credit. These network effects are enduring, suggesting that networks are used to sanction defaulting customers.
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