Trade credit use by shrimp farmers in Ca Mau province

Abstract

Purpose The purpose of this paper is to investigate the determinants of the amount of trade credit granted to shrimp farmers in Ca Mau. Design/methodology/approach Based on the literature review, the authors proposed six hypotheses on the determinants of the amount of trade credit granted to shrimp farmers. Data collected from 120 shrimp farmers in Ca Mau were used to test the proposed hypotheses. Findings Two out of six determinants, i.e. the size of input order (a pulling factor) and the competition among input suppliers (a pushing factor), are significantly positively associated with the amount of trade credit granted to shrimp farmers. No impact of the other determinants was found. The findings imply that shrimp farmers should join cooperatives to enhance access to trade credit and mitigate the risk for input suppliers. Originality/value This paper sheds light on the fact that trade credit is still granted to such risky buyers as shrimp farmers, which has not been explored by previous studies.