Estimados profesores,

Este viernes 13 de noviembre se llevará a cabo la vigésimo primera sesión del seminario interno de FEN donde se expone trabajos en progreso de académicos y avances de tesis de estudiantes.

En esta ocasión, JRodrigo Wagner presentará "Trust one container at a time: Sequential Trade-Credit Finance", trabajo realizado en conjunto con Fritz Foley (HVS) y cuyo resumen se encuentra más abajo.

El seminario se llevará a cabo a las 13:00 hrs en la sala P307 de la FEN. Se solicita confirmar asistencia con Pamela Fuentes al correo pamela.fuentes@econ.uchile.cl a más tardar el día jueves 12 de noviembre a las 13:00 horas, ya que el seminario contempla almuerzo.

Quienes deseen inscribir presentaciones para futuras sesiones, por favor dirigirse con Damián Vergara al correo damian.vergara.d@gmail.com.

Atentos saludos,

Dirección de Investigación FEN

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Título - Trust one container at a time: Sequential Trade-Credit Finance

Autores - Rodrigo Wagner, Fritz Foley

Abstract - When a seller ships two containers simultaneously her exposure to the counterparty risk of the buyer defaulting on the payment is two containers. In contrast, when the exporter ships two containers sequentially, the exposure is just one container, since she gets paid before shipping the second container. We argue sequential shipment is a relevant channel to finance international trade through Open Account; explaining part of the reduction in Cash in Advance and Bank-mediated trade finance in recent decades. Exposure through sequential trade finance is a source of increasing returns, since you can ship twice the sales with a less than proportional growth in Value-at-Risk of default. After a simple theoretical framework that formalizes this intuition, we use one and a half decades of Chilean export transaction to test this mechanism. We find that as the total annual value shipped is spread across more months, exporters are more likely to use Open Account terms. The results are robust to a number of alternative explanations, like age of the relationship, product heterogeneity and institutional differences. Exporting a sequence of containers could be an additional force against default, facilitating business-to-business credit.