Competition and Credit Sales in the Nigerian Flour Market: Evidence from Master Bakers in Ondo State
C. Chris Ofonyelu *
Department of Economics, Adekunle Ajasin University, Akungba Akoko, Ondo State, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
Selling on credit is an old tradition in the Nigerian flour market. The practice helps to ensure competitiveness and increase sales turnover. However, in recent years, credit sale has become a source of bad debt and business failures in the market. Despite this, the literature relating credit sales with competition in product markets is lacking. The focus has majorly been on the credit and financial markets. This study attempts to relate how competition impacts on credit sales and survival in Nigerian flour market. Using a two-stage model and numerical evaluations from sales representatives of 5 leading flour brands, the findings shows that credit sales does not guarantee competitiveness and that it threatens business survival. The study observed a declining link between selling on credit and competitiveness. Flour dealers need consider business survival as more important goal than sales turnover as default risks rises in the market
Keywords: Credit, dealers, market, sales turnover