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dc.contributor.authorAntras, Pol
dc.contributor.authorFoley, C Fritz
dc.date.accessioned2014-10-28T19:23:18Z
dc.date.issued2014-10-28
dc.identifier.citationAntras, Pol, and C. Fritz Foley. "Poultry in Motion: A Study of International Trade Finance Practices." Journal of Political Economy (forthcoming).en_US
dc.identifier.issn0022-3808en_US
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:13244612
dc.description.abstractThis paper analyzes the financing terms that support international trade and sheds light on how these terms shape the impact of economic shocks on trade. Analysis of transaction-level data from a U.S.-based exporter of frozen and refrigerated food products, primarily poultry, reveals broad patterns about the use of alternative financing terms. These patterns help discipline a model in which the choice of trade finance terms is shaped by the risk that an importer defaults on an exporter and by the possibility that an exporter does not deliver goods as specified in the contract. The empirical results indicate that cash in advance and open account terms are much more commonly used than letter of credit and documentary collection terms. Transactions are more likely to occur on cash in advance or letter of credit terms when the importer is located in a country with weak contractual enforcement. As an importer develops a relationship with the exporter, transactions are less likely to occur on terms that require prepayment. During the recent crisis, the exporter was more likely to demand cash in advance terms when transacting with new customers, and customers that traded on cash in advance and letter of credit terms prior to the crisis decreased their purchases by 17.3% more than other customers. The model illustrates that these findings can be rationalized if (i) misbehavior on the part of the exporter is of little concern to importers, and (ii) local banks in importing countries are more effective than the exporter in pursuing financial claims against importers.en_US
dc.language.isoen_USen_US
dc.publisherUniversity of Chicago Pressen_US
dash.licenseOAP
dc.subjectrisk and uncertaintyen_US
dc.subjectinternational financeen_US
dc.subjectfinancing and loansen_US
dc.subjecttradeen_US
dc.titlePoultry in Motion: A Study of International Trade Finance Practicesen_US
dc.typeJournal Articleen_US
dc.description.versionAuthor's Originalen_US
dc.relation.journalJournal of Political Economyen_US
dash.depositing.authorFoley, C Fritz
dc.date.available2014-10-28T19:23:18Z
dash.contributor.affiliatedFoley, C
dash.contributor.affiliatedAntras, Pol


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