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Trade Credit Insurance and Asymmetric Information Problem

Trade Credit Insurance and Asymmetric Information Problem The presence of different risk factors in international trade gives evidence of the necessity of support in gaps that may affect exporters’ activity. To maximize the trade volumes and in the same time to minimize the exporters’ risks the stakeholders use trade credit insurance. The paper provides analysis of conceptual background of the trade credit insurance in the world. We analyzed briefly the problems, arising in insurance markets due to asymmetric information, such as adverse selection and moral hazard. Also we discuss the main stages of development of trade credit insurance in countries worldwide. Using comparative and graphical analysis we provide a brief evaluation of the dynamics of claims and recoveries for different forms of trade credit insurance. We found that the claims related to the commercial risk for medium and long trade credits in recent years exceed the recoveries, while with the political risk the reverse trend holds. And we originally consider these findings in terms of information asymmetry in the trade credit insurance differentiated by type of risk. Keywords: trade credit insurance, export credit, international trade, international finance JEL classification: F10; F39; G22 1. INTRODUCTION At the current stage of development of international trade the indirect promotion http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Annals of the Alexandru Ioan Cuza University - Economics de Gruyter

Trade Credit Insurance and Asymmetric Information Problem

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References (47)

Publisher
de Gruyter
Copyright
Sciendo is a De Gruyter company © 2018. ALL RIGHTS RESERVED Powered by PubFactory
ISSN
2068-8717
eISSN
2068-8717
DOI
10.1515/aicue-2017-0008
Publisher site
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Abstract

The presence of different risk factors in international trade gives evidence of the necessity of support in gaps that may affect exporters’ activity. To maximize the trade volumes and in the same time to minimize the exporters’ risks the stakeholders use trade credit insurance. The paper provides analysis of conceptual background of the trade credit insurance in the world. We analyzed briefly the problems, arising in insurance markets due to asymmetric information, such as adverse selection and moral hazard. Also we discuss the main stages of development of trade credit insurance in countries worldwide. Using comparative and graphical analysis we provide a brief evaluation of the dynamics of claims and recoveries for different forms of trade credit insurance. We found that the claims related to the commercial risk for medium and long trade credits in recent years exceed the recoveries, while with the political risk the reverse trend holds. And we originally consider these findings in terms of information asymmetry in the trade credit insurance differentiated by type of risk. Keywords: trade credit insurance, export credit, international trade, international finance JEL classification: F10; F39; G22 1. INTRODUCTION At the current stage of development of international trade the indirect promotion

Journal

Annals of the Alexandru Ioan Cuza University - Economicsde Gruyter

Published: Mar 1, 2017

Keywords: Business and Economics; Political Economics; Political Economics, other

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