Abstract
Trade credit is an important financial mechanism and has recently received a considerable degree of attention in the academic literature (see, for example, McMillan and Woodruff, 1999). It is difficult to supply trade credit, however, if payment cannot be enforced effectively. Thus, the importance of informal enforcement mechanisms or relational contracting has been stressed (McMillan and Woodruff, 1999). It is crucially important to determine whether or not informal enforcement mechanisms are working well in sustaining trade credit in each developing and transition economy.
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References
Allen, Franklin, Jun Quan, and Meijun Quan (2003) “Law, Finance, and Economic Growth in China,” ILE, University of Pennsylvania Law School, Research Paper 3–21.
McMillan, John and Christopher Woodruff (1999) “Interfirm Relationships and Informal credit in Vietnam,” Quarterly Journal of Economics 114(4), 1285–1320.
Roland, Gerald and Thierry Verdier (2003) “Law Enforcement and Transition,” European Economic Review 47, 669–85.
Zhou, Xiaochuan (2004) “Improving Legal System and Financial Ecology,” Speech at the “Forum of 50 Chinese Economists,” December 2, Beijing, China.
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© 2006 Institute of Developing Economies (IDE), JETRO
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Yanagawa, N. (2006). Trade Credit and Imperfect Enforcement. In: Watanabe, M. (eds) Recovering Financial Systems. IDE-JETRO. Palgrave Macmillan, London. https://doi.org/10.1057/9780230624863_5
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DOI: https://doi.org/10.1057/9780230624863_5
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-28141-1
Online ISBN: 978-0-230-62486-3
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