This paper explores the consequences of using supplier trade credit within a vertical relational contract. The downstream firm operates in an environment where shocks may make it unable to repay. The shocks are unobservable to the supplier, which creates an asymmetric information problem. Trade credit limits the supplier’s possibilities to punish the downstream firm and termination is used in e...

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S routinely sell goods to retailers on credit. Common credit terms are tantamount to a schedule of declining discounts (escalating penalties) that depend on how long the retailer takes to pay off the supplier’s loan. However, issues such as which stocking policies are optimal in the presence of supplier-provided credit have been investigated only when demand is assumed deterministic. Nearly all...

This paper looks at the e¤ect of credit constraints on skill acquisition when agents have heterogeneous abilities and wealth. We use a general equilibrium model and assume credit markets are absent. Two payment systems for training are explored. Under the …rst, payment is made up front and as a result, credit constraints are severe. In the second, a form of work study is allowed, and this helps...

Abstract The paper examines the impact of trade credit on cyclical fluctuations in international trade. It provides new empirical evidence based firm-level UK and Irish data showing that exporters use more actively intensively than non-exporters. study introduces inter-firm lending into an open economy general equilibrium model with heterogeneous firms endogenous entry exports market. demonstra...

This paper studies the trade credit and delinquency behavior in Kazakhstan paying attention to effects of two recent crises using a unique dataset large firms SMEs from year 2009 2016. Our estimates suggest that relationship between bank is mainly substitutional except it was complementary for following 2014–5 crisis. new piece evidence on non-uniform during crisis might provide more insight in...

In this note, we modify the model of Huang [21] discussed with retailer’s ordering policy under conditions of cash discount and trade credit. Mathematical model has been modified for obtaining the optimal cycle time and optimal payment policy for item under cash discount and trade credit so that the annual total cost is minimized. Then, we provide a theorem to efficiently determine the optimal ...