OPTIMAL PAYMENT CONTRACTS IN TRADE RELATIONSHIPS

Autor:	Fischer, Christian
Rok vydání:	2023
Předmět:	Economics and Econometrics Weak institutions L14 D83 Contract enforcement ddc:330 ComputingMilieux_COMPUTERSANDSOCIETY G32 Trade credit Relational contracts F34 Trade dynamics Payment contracts
Zdroj:	International Economic Review.
ISSN:	1468-2354 0020-6598
DOI:	10.1111/iere.12636
Popis:	We study a seller's trade credit provision decision in a situation of repeated contracting with incomplete information over the buyer's payment propensity when the enforceability of formal contracts is uncertain. The payment terms of a transaction are selected in an inter-temporal trade-off between improving the quality of information acquisition and mitigating relationship breakdown risks. When contract enforcement institutions are weak, the optimal within-relationship provision dynamics of trade credit can be uniquely determined and depend on the share of patient buyers in the destination market as well as their access to liquidity. We obtain empirical evidence showing that in developing countries the relevance of trade credit in buyers' payment schedules has risen over-proportionally in recent years.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_dedup___::aa04d1cd3b62e0e2cece5aaa6b8c917a https://doi.org/10.1111/iere.12636 Zobrazit plný text záznamu