Customer Market Power and the Provision of Trade Credit : Evidence from Eastern Europe and Central Asia

Van Horen, Neeltje

World Bank, Washington, DC

关键词: ACCOUNTING;    AFFILIATED ORGANIZATIONS;    ASYMMETRIC INFORMATION;    BORROWING;    BORROWING CONSTRAINTS;   

DOI  :  10.1596/1813-9450-4284
RP-ID  :  WPS4284

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Statistics show that the sale of goodson credit is widespread among firms even when they arecapital constrained and thus face relatively high costs inproviding trade credit. This study provides an explanationfor this by arguing that customers who possess strong marketpower are able to increase their customer surplus bydemanding to purchase the goods on credit. This gain incustomer surplus increases with the degree of asymmetricinformation between buyer and seller with respect to productquality. Therefore, firms that are perceived as risky areespecially subject to the market power of the customer andhave to sell their goods on credit. Using detailedfirm-level data from a large number of firms in EasternEurope and Central Asia, this study finds evidenceconsistent with this hypothesis. It finds a strong positivecorrelation between customer market power and trade creditprovision. Furthermore, this relationship is especiallystrong when the supplier is more risky and in countries withlimited financial sector development or a weak legal system.