The Impact of Trade Credit on Customer Switching Behaviour: Evidence from the Tanzanian Rice Market

Niels Hermes (1, 2) , Ernest Pascal Kihanga (3) , Robert Lensink (2) , Clemens Lutz (4)

1 University of Groningen [Groningen]
2 Finance
3 Faculty of Commerce
4 Faculty of Economics and Business

We use primary survey data to analyse the relationship between trade credit and customer switching in the context of trade transactions between wholesalers and retailers in the Tanzanian rice market. Results reveal a negative relation of trade credit and customer switching, that is, trade credit acts as a switching barrier; retailers are reluctant to move to another supplier if they depend on trade credit as a source of external finance. This interpretation fits with the underdeveloped financial markets in Tanzania, in which access to external finance is poor among rice retailers.

Mots clés: Social Sciences & Humanities

Domaines: Sciences de l'Homme et Société

Niels Hermes, Ernest Pascal Kihanga, Robert Lensink, Clemens Lutz. The Impact of Trade Credit on Customer Switching Behaviour: Evidence from the Tanzanian Rice Market. The Journal of Development Studies, 2012, 48 (03), pp.363-376. ⟨10.1080/00220388.2011.615921⟩. ⟨hal-00807099⟩