A Study on Determinants of the Remittance Import Payment Method in Korean Small & Medium Enterprises

Purpose: The recent trend in the import payment terms of international trade shows that the pattern of payment methods adopted in international trade of Korea is changing remarkably. Especially, the use rate of remittance method is dramatically increasing. This study helps Korean small and medium enterprises to determine the efficient and rational import payment method by analyzing what factors influence the types of the remittance payment method in the remittance import payment method. Composition/Logic: Section I of this paper introduces the topic and raises the current issues facing the payment methods. Section II explores the current state of the import payment methods and analyzes the literature on payment methods. Section III describes the research model and methods of research. Section IV analyzes the determinants of the remittance Import Payment Method in Korean Small & Medium Enterprises and discusses their implications. The final section presents the concluding remarks on the study. Findings: From the results, we can find that the determinants of the advance remittance method are characterize the product, quality of goods, characteristics of goods industry and trade practices. Conversely, the factors that play a significant role in the deferred remittance method include the corporate credit ratings, transaction reliability, relative importance of import, deal duration, characteristics of the product, quality of goods, payment amounts, CEO interest, trade practices, exchange rating risk, payment expiration, import experience, scale of import, CEO opinion, and credit reputation. Originality/Value: Previous researches mainly focused on determinants of the payment methods at a general level. Few studies have examined the determinants of payment methods by subdividing the remittance payment method. Contrary to the prior payment studies, this is one of the first studies to focus on the determinants of remittance payment method. Thus, this research is meaningful in that it provides the determinants of remittance payment method and thereby helps importers to choose the right payment methods in international trade