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Relationship Between International Factoring and Cross-border Trade: A Granger Causality Approach

Author

Listed:
  • Zericho R. Marak

    (Zericho R. Marak (corresponding author) is at Symbiosis School of Banking and Finance, Symbiosis International, Pune, Maharashtra, India)

  • Deepa Pillai

    (Deepa Pillai is at the Symbiosis School of Banking and Finance, Symbiosis International, Pune, Maharashtra, India, e-mail: deepa.pillai@ssbf.edu.in)

Abstract

Trade finance is integral for international trade as it offers fluidity and safety to the movement of merchandise and services globally. After the financial crisis of 2008–2009, there has been an increase in the use of open accounts, which enhances the possibilities for availing factoring for international trade. International factoring has witnessed considerable growth in the last decade. This article examines the relationship between international factoring and cross-border trade using Granger causality. It also examines the causal relations of international factoring with disaggregated data of cross-border trade of imports and exports. We find a unidirectional causal flow from international trade to international factoring, and a unidirectional casual flow from exports to international factoring. JEL Classification: F10, F30

Suggested Citation

  • Zericho R. Marak & Deepa Pillai, 2021. "Relationship Between International Factoring and Cross-border Trade: A Granger Causality Approach," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 15(3), pages 320-337, August.
    • Handle: RePEc:sae:mareco:v:15:y:2021:i:3:p:320-337
    DOI: 10.1177/09738010211010373
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    References listed on IDEAS

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    More about this item

    Keywords

    Factoring; Trade Finance; Cross-border Trade; International Trade; Import; Export; Granger Causality;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F30 - International Economics - - International Finance - - - General

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