Trade and Consumer Credit: The Lifeblood of an Open Economy: The case of Vietnam.

In an open economy, goods and services do not move across borders alone. Trust moves with them. 

That trust is gradually measured, priced, and ultimately transformed into credit flows that sustain trade, consumption, and economic continuity.

While investment credit is often described as the “engine” of economic growth, trade credit and consumer credit function more like the economy’s lifeblood. They circulate continuously, reach deep into every supply chain, and touch nearly every household. When this circulation is smooth, the economy operates efficiently. When it is disrupted, most often by poor or unreliable information, trade and consumption are the first to slow.

This truth explains why a statement made by Dun & Bradstreet at the hundredth anniversary of credit reporting in 1941 remains highly relevant today: “Credit is Man’s Confidence in Man.” Throughout history and across various technologies, credit has always depended on trust, and trust, in turn, depends on information.

Credit, Trust, and Economic Circulation

Credit is not merely a financial instrument; it is a social and economic contract. Every extension of credit represents a judgment about another party’s ability and willingness to fulfill obligations in the future. In open economies, where transactions span borders, industries, and legal systems, that judgment becomes both more necessary and more fragile.

Trade credit and consumer credit differ in form, but they share a common foundation. Both allow economic actors to act today based on confidence in tomorrow. Both amplify growth when trust is well placed—and magnify risk when it is not. Understanding how these two forms of credit operate and why information quality determines their outcomes is essential to modern economic resilience.

Trade Credit: Keeping Supply Chains Moving

Trade credit arises when businesses sell goods or services while allowing deferred payment under agreed terms. In practical terms, it is a loan embedded directly into a commercial transaction. In competitive markets, extending credit is often unavoidable. Suppliers grant payment terms to retain customers, expand market share, and maintain order volumes.

As a result, trade credit serves as a critical bridge between production and consumption. It ensures that supply chains continue to function even when cash inflows and outflows are not perfectly synchronized. Without trade credit, many supply chains, especially in manufacturing, wholesale, and export-oriented sectors, would slow dramatically.

Data from Vietnam clearly illustrates this dynamic. The 2025 Payment Practices Barometer survey by Atradius reports average payment terms of around 43 days, overdue invoices affecting roughly 35 percent of B2B transactions, and bad debts averaging about 2 percent of total B2B invoice value. These figures point to two realities that coexist: trade credit is widely used as a growth tool, and payment risk is a constant feature that must be actively managed.

In open, multi-layered economies, trade credit spreads faster and more broadly than bank credit. When a foreign-invested enterprise increases domestic sourcing, Vietnamese suppliers often respond by selling more on credit. Logistics firms experience higher volumes. Retailers extend payment terms. The system circulates capital efficiently—but it also creates contagion risk. A single failure to pay can quickly cascade through multiple tiers of suppliers.

Consumer Credit: Sustaining Demand and Social Stability

If trade credit keeps supply chains moving, consumer credit sustains demand and stabilizes household expectations. Consumer credit enables families to smooth consumption over time, manage irregular income, and invest in education, healthcare, housing improvements, or other essential needs.

When consumer credit is accessible and responsibly managed, the economy becomes more resilient. Consumption is less volatile, and households are better equipped to absorb shocks. Conversely, when consumer credit contracts sharply, often due to rising defaults or inadequate risk information, spending falls quickly. Retail sales decline, production slows, and employment pressures follow.

Vietnam is at a critical stage in this regard. With an estimated population of approximately 101.6 million in 2025, the country represents a significant, still underserved consumer market. At the same time, the penetration of modern consumer credit instruments remains relatively low. Some industry estimates place credit card penetration at around 3 percent, highlighting the significant untapped potential for formal, transparent, and digitally delivered consumer credit products.

At the macro level, credit growth across Vietnam’s banking system in recent years reflects strong capital demand. The IMF has noted that credit growth accelerated in 2024 and reached elevated levels in the first half of 2025. Expanding credit is a necessary condition for economic development. Still, it also raises a fundamental question: where does credit flow, on what information is it based, and how accurately is risk priced?

Why Information Determines Credit Outcomes

In any credit-based economy, information is the oxygen of trust. Without reliable information, credit does not vanish overnight. Instead, it deforms in ways that undermine growth.

One outcome is blind credit extension: selling on credit or lending based on relationships, intuition, or outdated data. The other is credit contraction: lenders and suppliers become defensive, reduce limits, shorten terms, or demand prepayment—both outcomes damage trade and consumption.

This is precisely why the Dun & Bradstreet insight has endured across technological eras. Credit is fundamentally about trust, and trust cannot exist without reliable information.

In practice, “good information” must meet four minimum standards. It must be accurate, identifying the correct legal entity and obligations. It must be complete, capturing key risk factors such as litigation, ownership changes, operational status, and tax compliance. It must be timely, because credit decisions operate on daily and weekly cycles. And it must be verifiable, sourced transparently, and cross-checkable.

In trade credit, information determines who can be granted credit, at what limit, for how long, and under what conditions—and critically, when to stop. In consumer credit, information enables fairer risk pricing, preventing the pooling of reliable borrowers with high-risk ones, thereby expanding access while controlling bad debts.

Vietnam’s Opportunity: Building a Data-Driven Credit Market

Vietnam has strong foundations for the sustainable expansion of both trade credit and consumer credit.

First, the domestic market is large and rapidly urbanizing. With a population exceeding 100 million, even modest improvements in credit access can translate into substantial economic impact.

Second, foreign direct investment and export-oriented manufacturing continue to integrate Vietnam into global supply chains. This increases demand for B2B credit, trade credit insurance, supplier evaluation, and payment-risk management. Surveys consistently show that Vietnamese enterprises are extending more credit to business customers while becoming increasingly concerned about counterparty risk—creating both a challenge and a growing market for professional credit information services.

Third, digital finance and evolving payment behavior are enabling more efficient credit scoring and decision-making models. At the same time, they raise the bar for data quality and governance. With low penetration of products such as credit cards, the potential for transparent, affordability-based, and well-supervised consumer credit remains significant.

The decisive factor is clear: opportunity turns into sustainable growth only if Vietnam advances toward data-driven credit. Credit expansion cannot rely on relaxed standards. It must be built on better information, stronger assessment capacity, and disciplined risk management across banks and enterprises alike.

Technology Evolves, Trust Endures

Technology can process data faster and identify patterns more efficiently. But in credit, the final judgment remains human: who can be trusted, to what extent, and with what accountability.

In open trade and consumer societies, credit is the lifeblood of economic activity. To ensure that this lifeblood does not become a systemic risk, economies require something deceptively simple and profoundly challenging: accurate, reliable, and timely information.

In Vietnam, vnbis.com plays a critical role. VNBIS.COM offers verified data on legal status, financial performance, litigation, and risk indicators for all Vietnamese enterprises. By enabling banks, insurers, exporters, and businesses to make informed credit decisions, vnbis contributes directly to building trust through evidence. In a credit-driven economy, high-quality information is not merely a service; it is essential infrastructure.