Payment choice in international trade: theory and evidence from cross-country firm-level data

Hoefele, Andreas and Schmidt-Eisenlohr, Tim and Yu, Zhihong (2015) Payment choice in international trade: theory and evidence from cross-country firm-level data. Canadian Journal of Economics . ISSN 1540-5982 (In Press)

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Abstract

When trading across borders, firms choose between different payment contracts. Theoretically, this should allow firms to trade-off differences in financing costs and enforcement across countries. This paper provides evidence for this hypothesis employing firm-level data from a large number of developing countries. As predicted, international transactions are more likely paid after delivery when financing costs in the source country are high and when contract enforcement is low. We extend the theory and also show empirically that the more complex an industry is, the more important is contract enforcement and the less important are financing costs for the contract choice.

Item Type: Article
Additional Information: This is the peer reviewed version of the following article: Hoefele,A., Schmidt-Eisenlohr, T., Yu,Z. Payment choice in international trade: theory and evidence from cross-country firm-level data, Canadian Journal of Economics/Revue canadienne d'économique[FULL CITE], which has been published in final form at [Link to final article using the DOI]. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Keywords: trade finance, payment contracts, industry complexity, developing countries, trade intermediation
Schools/Departments: University of Nottingham UK Campus > Faculty of Social Sciences > School of Economics
Related URLs:
URLURL Type
http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1540-5982/UNSPECIFIED
Depositing User: Yu, Zhihong
Date Deposited: 30 Jun 2016 12:09
Last Modified: 26 Sep 2016 14:46
URI: http://eprints.nottingham.ac.uk/id/eprint/34410

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