A theory of domestic and international trade finance /

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Bibliographic Details
Author / Creator:	Ahn, JaeBin, author.
Imprint:	[Washington, D.C.] : International Monetary Fund, ©2011.
Description:	1 online resource (36 pages)
Language:	English
Series:	IMF working paper ; WP/11/262 IMF working paper ; WP/11/262.
Subject:	Commerce -- Econometric models. Bank loans -- Econometric models. Bank loans -- Econometric models. Commerce -- Econometric models.
Format:	E-Resource Book
URL for this record:	http://pi.lib.uchicago.edu/1001/cat/bib/12499659

Hidden Bibliographic Details
Other authors / contributors:	International Monetary Fund. Research Department, issuing body.
ISBN:	1283554437 9781283554435 9781463927165 1463927169 1463974396 9781463974398 9786613866882 6613866881 1463946848 9781463946845
Notes:	At head of title: Research Department. Title from PDF title page (IMF Web site, viewed November 23, 2011). "November 2011." Includes bibliographical references. English.
Summary:	This paper provides a theory model of trade finance to explain the "great trade collapse." The model shows that, first, the riskiness of international transactions rises relative to domestic transactions during economic downturns, and second, the exclusive use of a letter of credit in international transactions exacerbates a collapse in trade during a financial crisis. The basic model considers banks' optimal screening decisions in the presence of counterparty default risks. In equilibrium, banks will maintain a higher precision screening test for domestic firms and a lower precision screening test for foreign firms, which constitutes the main mechanism of the model.
Other form:	Print version: Ahn, JaeBin. A Theory of Domestic and International Trade Finance. Washington : International Monetary Fund, ©2011 9781463924607

Table of Contents:

Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Baseline Model; A. Banks with Costly Screening; 1. Screening Tests for Transactions Under Open Account System; 2. Property of Screening Tests; III. Trade Finance Premium; A. Optimal Investment in Screening Tests; 3. Optimal Investment in Screening Tests; B. Counter-Cyclical Trade Finance Premium; IV. Extension: A Letter of Credit (L/C); A.A Letter of Credit (L/C); B. Optimal Payment System; 4. L/C vs OA: Simplified Illustration; C. Banking Crisis and A Letter of Credit.
5. Cyclicality of the Relative Export Sales (L/C) to Domestic Sales (OA)V. Conclusion; References; Footnotes.

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