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Measuring the effects of economic policy uncertainty on trade credit financing

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  • Veysel Avsar
  • David Hudgins

Abstract

This article provides an empirical investigation of the impacts of economic policy uncertainty on the methods of financing international transactions. Using regression, probit, and ordered logit model analyses, we find that an increase in the economic policy uncertainty index decreases the likelihood that a given import transaction will occur under trade financing. Thus, increased economic uncertainty raises the probability of using Cash in Advance, due to the importers’ desire for increased cash holding that results from the additional risk exposure.

Suggested Citation

  • Veysel Avsar & David Hudgins, 2022. "Measuring the effects of economic policy uncertainty on trade credit financing," Applied Economics Letters, Taylor & Francis Journals, vol. 29(3), pages 249-252, February.
    • Handle: RePEc:taf:apeclt:v:29:y:2022:i:3:p:249-252
    DOI: 10.1080/13504851.2020.1861201
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    Cited by:

    1. Yang, Chien-Wen & Hsieh, Yi-Shan & Hung, Chih-Yuan, 2024. "Economic uncertainty and corporate cash holdings: Evidence from Taiwan," The North American Journal of Economics and Finance, Elsevier, vol. 73(C).

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