References (23)


Citations (5)



Trade Credit as a Competitiveness Tool; Evidence from Developing Countries

Neeltje van Horen

De Nederlandsche Bank; Centre for Economic Policy Research (CEPR)

February 2005

Statistics show that the sale of goods on credit is widespread among firms even when they are financially constrained and thus face relatively high costs in providing trade credit. A possible explanation for this is the use of trade credit as a competitiveness tool. By analyzing both the impact of customer as well as producer market power on a firm's decision to provide trade credit, we examine whether trade credit is indeed used as a way to lock in customers by firms in developing countries. Using a new dataset containing a large number of firms in 42 developing countries, we find strong evidence that an important driving force behind the decision to provide trade credit is the urge to be competitive. This especially holds for those firms that still have to establish a solid market reputation and for firms located in countries with an underdeveloped banking sector.

Number of Pages in PDF File: 34

JEL Classification: L10, L14

Open PDF in Browser Download This Paper

Date posted: July 9, 2004  

Suggested Citation

van Horen, Neeltje, Trade Credit as a Competitiveness Tool; Evidence from Developing Countries (February 2005). Available at SSRN: http://ssrn.com/abstract=562410 or http://dx.doi.org/10.2139/ssrn.562410

Contact Information

Neeltje van Horen (Contact Author)
De Nederlandsche Bank ( email )
PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB

Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Feedback to SSRN

Paper statistics
Abstract Views: 1,260
Downloads: 299
Download Rank: 67,532
References:  23
Citations:  5

© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.454 seconds