Interfirm Relationships and Informal Credit in Vietnam

摘要: Trading relations in Vietnam's emerging private sector are shaped by two market frictions: the difficulty of locating trading partners and absence legal enforcement contracts. Examining relational contracting, we find that a firm trusts its customer enough to offer credit when finds it hard locate an alternative supplier. A longer duration relationship is associated with larger credit, as prior information gathering. Customers identified through business networks receive more credit. These network effects enduring, suggesting used sanction defaulting customers.