Relationship Between International Factoring and Cross-border Trade: A Granger Causality Approach

Zericho R. Marak and Deepa Pillai
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Zericho R. Marak: Zericho R. Marak (corresponding author) is at Symbiosis School of Banking and Finance, Symbiosis International, Pune, Maharashtra, India
Deepa Pillai: Deepa Pillai is at the Symbiosis School of Banking and Finance, Symbiosis International, Pune, Maharashtra, India, e-mail: deepa.pillai@ssbf.edu.in

Margin: The Journal of Applied Economic Research, 2021, vol. 15, issue 3, 320-337

Abstract: Trade finance is integral for international trade as it offers fluidity and safety to the movement of merchandise and services globally. After the financial crisis of 2008–2009, there has been an increase in the use of open accounts, which enhances the possibilities for availing factoring for international trade. International factoring has witnessed considerable growth in the last decade. This article examines the relationship between international factoring and cross-border trade using Granger causality. It also examines the causal relations of international factoring with disaggregated data of cross-border trade of imports and exports. We find a unidirectional causal flow from international trade to international factoring, and a unidirectional casual flow from exports to international factoring. JEL Classification: F10, F30

Keywords: Factoring; Trade Finance; Cross-border Trade; International Trade; Import; Export; Granger Causality (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:15:y:2021:i:3:p:320-337

DOI: 10.1177/09738010211010373

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