貿易代金 決濟方式의 變化要因에 관한 硏究

A study on the determinants of selecting payment methods in international trade: The Korean case

Letter of credit(L/C) has played a significant role of reducing uncertainty of payments in international trade as the credit turns uncertainty of payments between sellers and buyers in international trade into bank credit. Despite the advantages of L/C the international trade in the 1990s experienced decreasing use of the payment method, while non-L/C methods such as remittances and collections have gained wide popularity. Considering the competitive international trade market and other economic environments that demerits use of L/C, this trend of popular non-L/C methods in international trade is expected to continue. This study tries to find out different causes of declining use of L/C in international trade using Korean data. Multivariate regressions are used to examine the relationship between the use of L/C and economic variables such as market competition, change of terms of trade (TOT), change of foreign exchange commission, globalization of business, and structure of exports. First, the market competition has a negative effect on the use of L/C and this implies ‘buyer’s market’ of international trade. Second, the change of TOT has a positive effect on the use of L/C. This may be so because exporters use other payment methods rather than L/C with deterioration of TOT. Third, structure of exports has a negative effect on L/C method and this implies that Foreign Direct Investment(FDI) of the conglomerates in the heavy/chemical industries may use non-L/C methods. Also, continuous trades with credible foreign partners make the L/C use costly. Last, Korean businesses’ globalization has a negative effect on the use of L/C and this implies that trade between parent company in Korea and foreign branches makes L/C use unnecessary.