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Measuring the effects of economic policy uncertainty on trade credit financing

Veysel Avsar () and David Hudgins

Applied Economics Letters, 2022, vol. 29, issue 3, 249-252

Abstract: This article provides an empirical investigation of the impacts of economic policy uncertainty on the methods of financing international transactions. Using regression, probit, and ordered logit model analyses, we find that an increase in the economic policy uncertainty index decreases the likelihood that a given import transaction will occur under trade financing. Thus, increased economic uncertainty raises the probability of using Cash in Advance, due to the importers’ desire for increased cash holding that results from the additional risk exposure.

Date: 2022
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DOI: 10.1080/13504851.2020.1861201

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