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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Trade Credit in Zimbabwean Manufacturing
Author:Fafchamps, MarcelISNI
Periodical:World Development
Geographic term:Zimbabwe
Subjects:commercial credit
Development and Technology
Economics and Trade
External link:https://doi.org/10.1016/S0305-750X(96)00134-9
Abstract:Banks are not the principal source of external finance that African firms have access to; trade credit, that is, credit offered by suppliers, dominates the picture. This article shows that certain Zimbabwean manufacturing firms, but not all, are rationed in their access to trade credit. It presents evidence which suggests that African firms are less likely to obtain trade credit than other firms, controlling for factors like firm size, age and sector of activity. These findings suggest that differences based purely on ethnicity exist in Zimbabwe's trade credit market. The author argues that this is due to a combination of two factors. First, African firms as a group may be subject to statistical discrimination: they are perceived as less reliable in repaying loans. Second, African firms are generally less well-connected and have few acquaintances in banking and business. The findings are based on a survey of some 200 Zimbabwean manufacturing firms conducted in 1993 and a series of case studies undertaken in 1994. Bibliogr., notes, ref., sum. (An alternative version appears in: African entrepreneurship: theory and reality, ed. by Anita Spring and Barbara E. McDade, Gainesville, Fla., cop. 1998, p. 251-273.)