Financial Sanctions and International Trade: Insights from New Data

Yoto Yotov, Gabriel Felbermayr, Heider Kariem (), Aleksandra Kirilakha (), Ohyun Kwon, Constantinos Syropoulos () and Erdal Yalcin
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Heider Kariem: Vienna University of Economics and Business and Austrian Institute of Economic Research (WIFO)
Aleksandra Kirilakha: School of Economics, Drexel University

No 202614, Working Papers from Center for Global Policy Analysis, LeBow College of Business, Drexel University

Abstract: We study the impact of financial sanctions on international trade. To pursue this objective, we assemble new data that distinguish between six types of financial sanctions across all countries in the world over the period 1950-2025. Combining these data with aggregate and disaggregated trade data in a structural gravity framework, we find that financial sanctions can exert substantial adverse effects on trade. However, these effects are highly heterogeneous across sectors, across sanction cases, and, most importantly, across the different types of financial sanctions in our data. Payment restrictions are most effective in eliminating trade between senders and targets. Unlike sanctions on goods, they also significantly reduce trade between targets and third countries.

Keywords: Financial sanctions; Payment restrictions; International trade; The Global Sanctions Data Base (GSDB) (search for similar items in EconPapers)
JEL-codes: F13 F14 F51 F52 (search for similar items in EconPapers)
Pages: 46
Date: 2026-08
New Economics Papers: this item is included in nep-his
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Persistent link: https://EconPapers.repec.org/RePEc:drx:wpaper:202614

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