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Trade Credit and Access to Finance: Evidence from Ethiopian Retailers†

Author

Listed:
  • Thorsten Beck
  • Mohammad Hoseini
  • Burak Uras

Abstract

Using data on over 5,500 Ethiopian retailers, we document that there is lower use of trade credit in areas with more access to bank finance. Among firms within an area, although receiving trade credit increases the use of a bank loan by informal firms, it has no association with the use of bank loans for formal firms. This result suggests that financial relationships with other firms acts as a signal of creditworthiness for informal firms which are usually more credit constrained due to agency problems.

Suggested Citation

  • Thorsten Beck & Mohammad Hoseini & Burak Uras, 2020. "Trade Credit and Access to Finance: Evidence from Ethiopian Retailers†," Journal of African Economies, Centre for the Study of African Economies, vol. 29(2), pages 146-172.
    • Handle: RePEc:oup:jafrec:v:29:y:2020:i:2:p:146-172.
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    File URL: http://hdl.handle.net/10.1093/jae/ejz018
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    Citations

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    Cited by:

    1. Machokoto, Michael & Mahonye, Nyasha & Makate, Marshall, 2022. "Short-term financing sources in Africa: Substitutes or complements?," Research in International Business and Finance, Elsevier, vol. 60(C).
    2. Dalton, Patricio & van Soest, Daan & Uras, Burak, 2023. "E-payment technology and business finance: A randomized controlled trial with mobile money," Other publications TiSEM a85169a4-253e-40a5-b46a-7, Tilburg University, School of Economics and Management.

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