It is argued that, to a businessman nothing is simpler than an irrevocable letter of credit transaction; he or she never thinks about the nature of the obligation incurred by the issuing bank. However, significant uncertainty, ambiguity as to the nature of the obligation arises when lawyers,...

This paper studies the importance of incentives as a determinant of international trade flows. We argue that barter, countertrade and foreign direct investment can be seen as efficient institutions that mitigate contractual hazards which arise in technology trade, marketing and imperfect capital...

The choice of payment terms has increasingly become more important in determining the success of exporting transactions. While exporters often use Open Account (OA) terms to secure international contracts and to expand export levels, these terms in turn make them face more non-payment risks. In...