Choice of Invoicing Currency: New evidence from a questionnaire survey of Japanese export firms
This paper is the first comprehensive research using a questionnaire survey on the choice of invoicing currency with all Japanese manufacturing firms listed in the Tokyo Stock Exchange. Questionnaires were sent out to 920 Japanese firms in September 2009, and 227 firms responded. We present new firm-level evidence on invoicing currency by the destination and type of trading partners, with a particular emphasis on the difference between arms-length and intra-firm trades. We also conduct cross-section analysis to investigate what determines the invoicing choice of Japanese firms. Our novel findings are as follows. (1) The invoicing choice depends on whether it is an intra-firm trade or an arms-length trade. While yen invoicing tends to be chosen in arms-length trades, there is a strong tendency that invoicing in the importer's currency is used in intra-firm trades, suggesting that the parent firm in Japan assumes and manages the currency risk. In exports to Asian subsidiaries, U.S. dollar invoicing is used. (2) Firm size does matter in the choice of invoice currency. The larger (smaller) the size of the firms, the more likely they are to conduct intra-firm (arms-length, resp.) trades. (3) In terms of the number of Japanese firms, using yen invoicing is more prevalent than U.S. dollar invoicing. However, adjusting for the export value of each firm, the share of U.S. dollar invoicing is on average larger than that of yen invoicing, mainly because Japanese firms with a large volume of exports tend to have a global sales and production network where U.S. dollar invoicing is dominant, especially in the case of "triangular trade."
|Date of creation:||Apr 2013|
|Date of revision:|
|Contact details of provider:|| Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901|
Web page: http://www.rieti.go.jp/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Philippe Bacchetta & Eric van Wincoop, 2003.
"Why Do Consumer Prices React Less Than Import Prices to Exchange Rates?,"
Journal of the European Economic Association,
MIT Press, vol. 1(2-3), pages 662-670, 04/05.
- Philippe Bacchetta & Eric van Wincoop, 2002. "Why Do Consumer Prices React less than Import Prices to Exchange Rates?," NBER Working Papers 9352, National Bureau of Economic Research, Inc.
- Philippe Bacchetta & Eric van Wincoop, 2002. "Why Do Consumer Prices React less than Import Prices to Exchange Rates?," Working Papers 02.05, Swiss National Bank, Study Center Gerzensee.
- Bacchetta, Philippe & van Wincoop, Eric, 2003. "Why do Consumer Prices React Less than Import Prices to Exchange Rates?," CEPR Discussion Papers 3702, C.E.P.R. Discussion Papers.
- Philippe Bacchetta & Eric van Wincoop, 2002. "Why Do Consumer Prices React less than Import Prices to Exchange Rates ?," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 02.18, Université de Lausanne, Faculté des HEC, DEEP.
- Rauch, James E., 1999.
"Networks versus markets in international trade,"
Journal of International Economics,
Elsevier, vol. 48(1), pages 7-35, June.
- Hellerstein, Rebecca & Villas-Boas, Sofia B., 2010.
"Outsourcing and pass-through,"
Journal of International Economics,
Elsevier, vol. 81(2), pages 170-183, July.
- Hellerstein, Rebecca & Villas-Boas, Sofia B., 2010. "Outsourcing and Pass-Through," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt8098p5nq, Department of Agricultural & Resource Economics, UC Berkeley.
- Hellerstein, Rebecca & Villas-Boas, Sofia B, 2006. "Outsourcing and pass-through," CUDARE Working Paper Series 1016R3, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy, revised Feb 2010.
- Friberg, Richard, 1998. "In which currency should exporters set their prices?," Journal of International Economics, Elsevier, vol. 45(1), pages 59-76, June.
- Friberg, Richard & Wilander, Fredrik, 2008. "The currency denomination of exports -- A questionnaire study," Journal of International Economics, Elsevier, vol. 75(1), pages 54-69, May.
- Neiman, Brent, 2010. "Stickiness, synchronization, and passthrough in intrafirm trade prices," Journal of Monetary Economics, Elsevier, vol. 57(3), pages 295-308, April.
- Shin-ichi Fukuda & Ji Cong, 1994.
"On the Choice of Invoice Currency by Japanese Exporters: The PTM Approach,"
Discussion Paper Series
a289, Institute of Economic Research, Hitotsubashi University.
- Fukuda Shin-ichi & Cong Ji, 1994. "On the Choice of Invoice Currency by Japanese Exporters: The PTM Approach," Journal of the Japanese and International Economies, Elsevier, vol. 8(4), pages 511-529, December.
- Shabtai Donnenfeld & Alfred Haug, 2003. "Currency Invoicing in International Trade: an Empirical Investigation," Review of International Economics, Wiley Blackwell, vol. 11(2), pages 332-345, 05.
- Shin-ichi Fukuda & Masanori Ono, 2004. "The Choice of Invoice Currency under Uncertainty: Theory and Evidence from Korea," CIRJE F-Series CIRJE-F-271, CIRJE, Faculty of Economics, University of Tokyo.
When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:13034. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (NUKATANI Sorahiko)
If references are entirely missing, you can add them using this form.