This paper examines interfirm relationships and informal credit in Vietnam, using data from a survey of 259 nonstate firms in Hanoi and Ho Chi Minh City. The study finds that interfirm relationships are not purely transactional but are embedded in two types of networks: family/friend networks and industry-based communication networks. Firms use these networks to evaluate potential trading partners and monitor existing ones. Informal mechanisms, such as community sanctions, are effective in facilitating trade in the absence of a legal system, but they come with efficiency costs, including exclusion of new entrants. The paper explores the determinants of trade credit, finding that firms with more information about their trading partners are more likely to offer credit. Factors such as the customer's search costs, the firm's information about the customer, and the presence of community sanctions influence credit decisions. Small firms rely more on family networks, while large firms use industry-based networks. Trade credit is also influenced by the ability to resell repossessed goods and the potential for price discrimination. The study compares findings on trade credit in Vietnam with those in advanced economies, noting similarities and differences. While search costs are higher in Vietnam due to the lack of formal financial systems, the role of informal mechanisms in facilitating trade is similar. The paper also finds that trade credit is influenced by the firm's size, with larger firms granting and receiving less credit as a fraction of sales than smaller firms. The study highlights the importance of informal mechanisms in facilitating trade in Vietnam, despite their inefficiencies. It suggests that firms must break free from reliance on family-based clientelistic links to achieve success. The findings contribute to the understanding of how informal credit and interfirm relationships function in economies with weak legal systems.This paper examines interfirm relationships and informal credit in Vietnam, using data from a survey of 259 nonstate firms in Hanoi and Ho Chi Minh City. The study finds that interfirm relationships are not purely transactional but are embedded in two types of networks: family/friend networks and industry-based communication networks. Firms use these networks to evaluate potential trading partners and monitor existing ones. Informal mechanisms, such as community sanctions, are effective in facilitating trade in the absence of a legal system, but they come with efficiency costs, including exclusion of new entrants. The paper explores the determinants of trade credit, finding that firms with more information about their trading partners are more likely to offer credit. Factors such as the customer's search costs, the firm's information about the customer, and the presence of community sanctions influence credit decisions. Small firms rely more on family networks, while large firms use industry-based networks. Trade credit is also influenced by the ability to resell repossessed goods and the potential for price discrimination. The study compares findings on trade credit in Vietnam with those in advanced economies, noting similarities and differences. While search costs are higher in Vietnam due to the lack of formal financial systems, the role of informal mechanisms in facilitating trade is similar. The paper also finds that trade credit is influenced by the firm's size, with larger firms granting and receiving less credit as a fraction of sales than smaller firms. The study highlights the importance of informal mechanisms in facilitating trade in Vietnam, despite their inefficiencies. It suggests that firms must break free from reliance on family-based clientelistic links to achieve success. The findings contribute to the understanding of how informal credit and interfirm relationships function in economies with weak legal systems.