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Towards a theory of trade finance

Abstract:

Shipping goods internationally is risky and takes time. To allocate risk and to finance the time gap between production and sale, a range of payment contracts is utilized. I study the optimal choice between these payment contracts and their implications for trade. The equilibrium contract is determined by financial market characteristics and contracting environments in both the source and the destination country. Trade increases in enforcement probabilities and decreases in financing cost...

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Publication status:
Published

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Publisher:
University of Oxford Publisher's website
Series:
Department of Economics Discussion Paper Series
Publication date:
2011-12-01
Paper number:
583
Keywords:
Pubs id:
1143845
Local pid:
pubs:1143845
Deposit date:
2020-12-15

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