Payment choice in international trade: theory and evidence from cross-country firm-level data
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 develo...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Wiley
2015
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| Online Access: | https://eprints.nottingham.ac.uk/34410/ |
| _version_ | 1848794846723047424 |
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| author | Hoefele, Andreas Schmidt-Eisenlohr, Tim Yu, Zhihong |
| author_facet | Hoefele, Andreas Schmidt-Eisenlohr, Tim Yu, Zhihong |
| author_sort | Hoefele, Andreas |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | 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. |
| first_indexed | 2025-11-14T19:22:41Z |
| format | Article |
| id | nottingham-34410 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T19:22:41Z |
| publishDate | 2015 |
| publisher | Wiley |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-344102020-05-08T12:30:15Z https://eprints.nottingham.ac.uk/34410/ Payment choice in international trade: theory and evidence from cross-country firm-level data Hoefele, Andreas Schmidt-Eisenlohr, Tim Yu, Zhihong 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. Wiley 2015-05-06 Article PeerReviewed application/pdf en https://eprints.nottingham.ac.uk/34410/8/CJE_2015_HSY_wp.pdf Hoefele, Andreas, 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) trade finance payment contracts industry complexity developing countries trade intermediation |
| spellingShingle | trade finance payment contracts industry complexity developing countries trade intermediation Hoefele, Andreas Schmidt-Eisenlohr, Tim Yu, Zhihong Payment choice in international trade: theory and evidence from cross-country firm-level data |
| title | Payment choice in international trade: theory and evidence from cross-country firm-level data |
| title_full | Payment choice in international trade: theory and evidence from cross-country firm-level data |
| title_fullStr | Payment choice in international trade: theory and evidence from cross-country firm-level data |
| title_full_unstemmed | Payment choice in international trade: theory and evidence from cross-country firm-level data |
| title_short | Payment choice in international trade: theory and evidence from cross-country firm-level data |
| title_sort | payment choice in international trade: theory and evidence from cross-country firm-level data |
| topic | trade finance payment contracts industry complexity developing countries trade intermediation |
| url | https://eprints.nottingham.ac.uk/34410/ |