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

Kemal Turkcan () and Veysel Avsar ()

MPRA Paper from University Library of Munich, Germany

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 cost 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. (search for similar items in EconPapers)
JEL-codes: F14 F30 (search for similar items in EconPapers)
Date: 2015-05-29
New Economics Papers: this item is included in nep-ara, nep-cta and nep-cwa
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https://mpra.ub.uni-muenchen.de/64680/1/MPRA_paper_64680.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/65411/1/MPRA_paper_65411.pdf revised version (application/pdf)

Related works:
Journal Article: Investigating the Role of Contract Enforcement and Financial Costs on the Payment Choice: Industry-Level Evidence from Turkey (2016) Downloads
Journal Article: Investigating the Role of Contract Enforcement and Financial Costs on the Payment Choice: Industry-Level Evidence from Turkey (2016) Downloads
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