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Cash-In-Advance Payments and Transaction Size: Cash-Constrained Importers

In: Emerging Markets and Industrialized Countries in the New Wave of Globalization

Author

Listed:
  • Yushi Yoshida

    (Shiga University)

  • Kemal Türkcan

    (Akdeniz University)

  • Taiyo Yoshimi

    (Chuo University)

Abstract

A high-productivity exporter can be in a stronger position when facing an importer in determining how and when payment is made. With a lower risk associated with exporters, cash-in-advance (CIA) payment is preferred by exporters. However, a baseline probit regression for the Turkish export dataset at the transaction level could not find a positive relationship between exporters’ productivity and CIA. This puzzling finding is reconciled when we consider the financial conditions of importers, which may not allow their payment in advance, especially for a large-cash transaction. We find that the transaction size discourages the use of CIA payments. We also find that the productivity of exporters is associated non-linearly, i.e., in an inverted-U shape, with the use of CIA payments.

Suggested Citation

  • Yushi Yoshida & Kemal Türkcan & Taiyo Yoshimi, 2025. "Cash-In-Advance Payments and Transaction Size: Cash-Constrained Importers," Springer Proceedings in Business and Economics, in: Gilles Dufrénot & Kimiko Sugimoto (ed.), Emerging Markets and Industrialized Countries in the New Wave of Globalization, pages 165-176, Springer.
    • Handle: RePEc:spr:prbchp:978-3-032-04602-4_8
    DOI: 10.1007/978-3-032-04602-4_8
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