Peer Effects in Program Participation

Gordon Dahl, Katrine Løken and Magne Mogstad

No 4349, CESifo Working Paper Series from CESifo

Abstract: When trading, firms choose between different payment contracts. As shown theoretically in Schmidt-Eisenlohr (forthcoming), this allows firms in international trade to optimally trade-off differences in financing costs and enforcement across countries. This paper provides evidence from a large number of countries that shows that country characteristics are indeed central determinants of the payment contract choice. As predicted, the use of open account decreases in financing costs and contract enforcement in the source country. We extend the theory and test two additional predictions. First, we show that the more complex the industry of a firm, the more important is the quality of contract enforcement and the less important are the financing costs for the contract choice. Second, we compare direct and indirect exporters and find evidence that suggests that intermediaries play a relevant role in contract enforcement across borders.

Keywords: trade finance; payment contracts; industry complexity; developing countries; trade intermediation (search for similar items in EconPapers)
JEL-codes: F12 F30 G21 G32 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp4349.pdf (application/pdf)

Related works:
Journal Article: Peer Effects in Program Participation (2014)
Working Paper: PEER EFFECTS IN PROGRAM PARTICIPATION (2012)
Working Paper: Peer Effects in Program Participation (2012)
Working Paper: Peer Effects in Program Participation (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4349

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().