Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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Empirical Study on Determinants of T/T Payment Risk in International Trade

무역거래에서 송금(T/T)방식의 결제 위험성에 영향을 미치는 요인분석

  • Han, Woo-Jung (Department of International Trade, Chungnam National University) ;
  • Cho, Hyuk-Soo (Department of International Trade, Chungnam National University)
  • Received : 2019.11.19
  • Accepted : 2019.12.12
  • Published : 2019.12.31
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Abstract

L/C(Letter of Credit) is a common payment term designed to prevent credit risk in international trade. However, most companies prefer T/T (Telegraphic Transfer) payment due to its time and cost efficiency. According to related statistics, more than 70% of international trade contracts are based on T/T rather than other payment terms. The time required from the export negotiation to the completion of the export transaction and collection in international trade is very long. In this process, disputes related to settlement are continuous, so caution should be exercised. Therefore, whether or not the export payment is recovered in a timely manner is the core issue of trade transactions for exporters. The purpose of this study is to identify problems that cause delayed payments during settlement by the remittance (T/T) method, which can lead to settlement risk, in order to investigate those factors which can lead to delays in payments and increased risk as well as to determine ways to prevent such factors in advance. According to empirical findings, trading experience, transaction duration, and contract contents can be important determinants in terms of payment delays. Industry uniqueness and market uncertainty were found to be in opposition to the hypothesized relationships. The results of this study will be useful for trading companies to reduce their payment risk.

Keywords

Acknowledgement

This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2018S1A5B8070344)

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