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Global Economy Journal

The Official Publication of the International Trade and Finance Association

Ed. by Pelzman, Joseph


CiteScore 2018: 0.33

SCImago Journal Rank (SJR) 2018: 0.157
Source Normalized Impact per Paper (SNIP) 2018: 0.402

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Volume 16, Issue 1

Issues

Investigating the Role of Contract Enforcement and Financial Costs on the Payment Choice: Industry-Level Evidence from Turkey

Kemal Türkcan / Veysel Avsar
Published Online: 2016-03-08 | DOI: https://doi.org/10.1515/gej-2015-0020

Abstract

This paper examines the effect of legal and financial conditions on the payment contract choice by empirically testing the predictions of Schmidt-Eisenlohr’s (2013) model with actual bilateral industry level trade finance data (at 2-digit level) from Turkey. Our results show that an improvement in contract enforcement and an increase in the financing costs in the importing country (exporting country) increases (decreases) the share of post-shipment sales. For the share of pre-payment sales, the opposite effects are estimated. Finally, we find that share of post-shipment sales (pre-payment sales) increases (decreases) in the number of products traded between partners in the past.

Keywords: method of payments; trade finance; contract enforcement; financial costs; post-shipment; pre-payment; Turkey

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About the article

Published Online: 2016-03-08

Published in Print: 2016-03-01


Citation Information: Global Economy Journal, Volume 16, Issue 1, Pages 135–160, ISSN (Online) 1553-5304, ISSN (Print) 2194-5659, DOI: https://doi.org/10.1515/gej-2015-0020.

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