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

Türkcan, Kemal; Avsar, Veysel

doi:10.1515/gej-2015-0020

Cited by 3 publications

(1 citation statement)

References 23 publications

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“…While Saygılı (2023) focused primarily on ERPT, this paper focuses on invoicing currency choices made by Turkish exporters.8 This paper also relates to the growing literature on the factors affecting payment methods in international trade, including works bySchmidt-Eisenlohr (2013),Antras and Foley (2015),Hoefele et al (2016), Doan et al (2020), and Türkcan et al (2024; these studies primarily use transaction-level trade data. Other studies, such as those by Niepmann and Schmidt-Eisenlohr (2017),Avsar (2016 and, Javorcik (2018, 2020),Im (2021),Avsar et al (2022), andCrozet et al (2022), primarily use country-level trade finance data.…”

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confidence: 99%

Payment Method and Invoicing Currency: Evidence from Turkish Textile and Clothing Exports

Türkcan,

Yoshida,

Yoshimi

2024

Preprint

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This study examines how the payment method affects the choice of invoicing currency. Focusing on Turkish textile and clothing exports, it finds that exporters using the open account method, where payment is made after goods are received, prefer to invoice in their home currency (Turkish lira) to mitigate exchange rate risks associated with foreign currencies. This preference is more pronounced among small and medium-sized enterprises. We also find that the euro, the predominant foreign currency in our Turkish sample, is less likely to be used under the OA method. Additionally, the Turkish lira is more likely chosen as the invoicing currency when its value is higher, when exporting to fewer countries, or by less productive exporters. JEL Classification: F14 and L14

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confidence: 99%

Payment Method and Invoicing Currency: Evidence from Turkish Textile and Clothing Exports

Türkcan,

Yoshida,

Yoshimi

2024

Preprint

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Exporter’s Productivity and the Cash-In-Advance Payment: Transaction-Level Analysis of Turkish Textile and Clothing Exports

Türkcan,

Yoshida,

Yoshimi

2024

Open Econ Rev

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International trade, risk and the role of banks

Niepmann

Schmidt‐Eisenlohr

2017

Journal of International Economics

118

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Banks play a critical role in international trade by providing trade finance products that reduce the risk of exporting. This paper employs two new data sets to shed light on the magnitude and structure of this business, which, as we show, is highly concentrated in a few large banks. The two principal trade finance instruments, letters of credit and documentary collections, covered about 10 percent of U.S. exports in 2012. They are preferred for larger transactions, which indicates the existence of substantial fixed costs in the provision and use of these instruments. Letters of credit are employed the most for exports to countries with intermediate degrees of contract enforcement. Compared to documentary collections, they are used for riskier destinations. We provide a model of payment contract choice that rationalizes these empirical findings, and we discuss implications for the ongoing provision of trade finance.

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

Cited by 3 publications

References 23 publications

Payment Method and Invoicing Currency: Evidence from Turkish Textile and Clothing Exports

Payment Method and Invoicing Currency: Evidence from Turkish Textile and Clothing Exports

Exporter’s Productivity and the Cash-In-Advance Payment: Transaction-Level Analysis of Turkish Textile and Clothing Exports

International trade, risk and the role of banks

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