Trade credit and bank lending under asymmetric information

Abstract

In trade credit, supplier allows retailer delay payment with some interest rate, which has become another financing resource just as bank lending. For retailers have private information, supplier and bank should provide different contracts to retailers with respect to their type. We analysis the trade credit and bank lending contract under the condition that the supplier and the bank can observe imprecise signal of the retailers' type, and give the contracts which the supplier and bank should provide respectively. © 2011 Springer-Verlag.