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Financial Sanctions and International Trade: Insights from New Data

Author

Listed:
  • Yoto V. Yotov

    (School of Economics, Drexel University and Center for Global Policy Analysis (CGPA))

  • Gabriel Felbermayr

    (Vienna University of Economics and Business and Austrian Institute of Economic Research (WIFO))

  • Heider Kariem

    (Vienna University of Economics and Business and Austrian Institute of Economic Research (WIFO))

  • Aleksandra Kirilakha

    (School of Economics, Drexel University)

  • Ohyun Kwon

    (University of Pennsylvania and Center for Global Policy Analysis (CGPA))

  • Constantinos Syropoulos

    (School of Economics, Drexel University and Center for Global Policy Analysis (CGPA))

  • Erdal Yalcin

    (HTWG Konstanz University of Applied Sciences)

Abstract

We study the impact of financial sanctions on international trade. To pursue this objective, we assemble new data that distinguish between six types of financial sanctions across all countries in the world over the period 1950-2025. Combining these data with aggregate and disaggregated trade data in a structural gravity framework, we find that financial sanctions can exert substantial adverse effects on trade. However, these effects are highly heterogeneous across sectors, across sanction cases, and, most importantly, across the different types of financial sanctions in our data. Payment restrictions are most effective in eliminating trade between senders and targets. Unlike sanctions on goods, they also significantly reduce trade between targets and third countries.

Suggested Citation

  • Yoto V. Yotov & Gabriel Felbermayr & Heider Kariem & Aleksandra Kirilakha & Ohyun Kwon & Constantinos Syropoulos & Erdal Yalcin, 2026. "Financial Sanctions and International Trade: Insights from New Data," Working Papers 202614, Center for Global Policy Analysis, LeBow College of Business, Drexel University.
    • Handle: RePEc:drx:wpaper:202614
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    File URL: https://www.lebow.drexel.edu/sites/default/files/2026-08/CGPA-202614-insights-new-data.pdf
    File Function: First version, 2026
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    More about this item

    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism

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