Trade credit in the Tanzanian rice market

PhD ceremony: Mr. E.P. Kihanga, 13.15 uur, Academiegebouw, Broerstraat 5, Groningen

Thesis: Trade credit in the Tanzanian rice market

Promotor(s): prof. C.L.M. Hermes, prof. B.W. Lensink

Faculty: Economics and Business

The thesis deals with trade credit in the rice market of Tanzania. It focuses on three topics in which different but related aspects of trade credit are analyzed. The analysis, carried out in the framework of these three topics, is based on detailed information from both parties involved in a specific transaction.

First, it aims at providing empirical evidence concerning the determinants of trade credit supply and demand in the rice market. A new estimation technique, i.e. structural modeling, is used to determine the factors that influence the amount of trade credit use. This approach is applied in order to disentangle demand and supply effects.

Second, it aims at providing empirical evidence regarding the impact of trade credit on customer switching behavior. In an increasing number of studies, it is claimed that trade credit can prevent switching. In order to test this assertion, trade credit is introduced in the analysis as an explanatory variable, along with a list of other variables that are used to measure barriers to switching. Third, it aims at providing evidence for the determinants of the length of the trade credit period. Trade credit period vary widely, even for the customers of the same supplier.