ABSTRACT
Using a novel data on payment choice in export transactions, this study shows that financing cost in a country is more important in terms of offering (undertaking) post-shipment (prepayment) terms in exports (imports) for the industries that rely more on external finance.
Acknowledgement
We thank Tim Schmidt-Eisenlohr and Nurullah Gur for helpful comments and discussions.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 Manova (Citation2012).
2 Beck (Citation2003).
3 Similar studies include Antràs and Foley (Citation2015) and Demir and Javorcik (Citation2014). Demir and Javorcik (Citation2014) use a highly disaggregated data on payment choice from Turkey.
4 We checked the F-test for the individual effects to conclude that panel estimation and Hausman test to conclude that fixed effects is a better choice.
5 Shares are between 0 and 1.
6 Our results are insensitive to treating only Open Account as post-shipment.
7 The financial dependence measure is time-invariant.