Trade credit in transition economies: does state ownership matter?. Issue 3 (3rd April 2022)

• Record Type: Journal Article
• Authors: Boubaker, Sabri; Cuong, Ly Kim; Tran, Nam Hoai
• Is Part Of: Post-communist economies. Volume 34:Issue 3(2022)
• Page Start: 293
• Page End: 327
• Publication Date: 2022-04-03
• Subjects: Trade credit -- state ownership -- accounting conservatism -- privatisation -- transition economies; Post-communism -- Economic aspects -- Periodicals; Russia (Federation) -- Economic conditions -- Periodicals; Europe, Eastern -- Economic conditions -- Periodicals; 330.91717
• DOI: 10.1080/14631377.2021.1886790
• Languages: English
• ISSNs: 1463-1377

Abstract

ABSTRACT: This article investigates the effect of residual state ownership on trade credit in Vietnam. The empirical results show that a substantial withdrawal of the state from listed state-owned enterprises (SOEs) does not disturb these firms' supply of and demand for trade credit, suggesting that trade credit is not a source of soft budget constraint and local privatisation programmes have not been motivated by efficiency. Privatisation seems to be a transitional phenomenon in a state-dominated economy that is inadequately supportive of private sector development and a poor legal system encouraging informal contracts. Interestingly, Vietnamese firms with more accounting conservatism, probably in response to their creditors' increasing demand for financial reporting quality, are found to provide less trade credit, suggesting that adopting more conservative accounting arising from the government's privatisation may be associated with firms' better accessibility to bank credit.