Credit Rationing and Pass-Through in Supply Chains: Theory and Evidence from Bangladesh

M. Shahe Emran, Dilip Mookherjee, Forhad Shilpi and M. Helal Uddin

American Economic Journal: Applied Economics, 2021, vol. 13, issue 3, 202-36

Abstract: Traders are often blamed for high prices, prompting government regulation. We study the effects of a government ban of a layer of financing intermediaries in edible oil supply chain in Bangladesh during 2011–2012. Contrary to the predictions of a standard model of an oligopolistic supply chain, the ban caused downstream wholesale and retail prices to rise, and pass-through of the changes in imported crude oil price to fall. These results can be explained by an extension of the standard model to incorporate trade credit frictions, where intermediaries expand credit access of downstream traders.

JEL-codes: L13 L14 L66 O13 Q11 Q13 Q17 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Credit Rationing and Pass-Through in Supply Chains: Theory and Evidence from Bangladesh (2020)
Working Paper: Credit Rationing and Pass-Through in Supply Chains: Theory and Evidence from Bangladesh (2020)
Working Paper: Credit Rationing and Pass-Through in Supply Chains: Theory and Evidence from Bangladesh (2017)
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DOI: 10.1257/app.20190083

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