TY - JOUR

T1 - Trade credit insurance and asymmetric information problem

AU - Sokolovska, Olena

PY - 2017

Y1 - 2017

N2 - The presence of different risk factors in international trade gives evidence of the necessity of support in gaps that may affect exporters' activity. To maximize the trade volumes and in the same time to minimize the exporters' risks the stakeholders use trade credit insurance. The paper provides analysis of conceptual background of the trade credit insurance in the world. We analyzed briefly the problems, arising in insurance markets due to asymmetric information, such as adverse selection and moral hazard. Also we discuss the main stages of development of trade credit insurance in countries worldwide. Using comparative and graphical analysis we provide a brief evaluation of the dynamics of claims and recoveries for different forms of trade credit insurance. We found that the claims related to the commercial risk for medium and long trade credits in recent years exceed the recoveries, while with the political risk the reverse trend holds. And we originally consider these findings in terms of information asymmetry in the trade credit insurance differentiated by type of risk.

AB - The presence of different risk factors in international trade gives evidence of the necessity of support in gaps that may affect exporters' activity. To maximize the trade volumes and in the same time to minimize the exporters' risks the stakeholders use trade credit insurance. The paper provides analysis of conceptual background of the trade credit insurance in the world. We analyzed briefly the problems, arising in insurance markets due to asymmetric information, such as adverse selection and moral hazard. Also we discuss the main stages of development of trade credit insurance in countries worldwide. Using comparative and graphical analysis we provide a brief evaluation of the dynamics of claims and recoveries for different forms of trade credit insurance. We found that the claims related to the commercial risk for medium and long trade credits in recent years exceed the recoveries, while with the political risk the reverse trend holds. And we originally consider these findings in terms of information asymmetry in the trade credit insurance differentiated by type of risk.

KW - Export credit

KW - International finance

KW - International trade

KW - Trade credit insurance

UR - http://www.scopus.com/inward/record.url?scp=85018181679&partnerID=8YFLogxK

U2 - 10.1515/saeb-2017-0008

DO - 10.1515/saeb-2017-0008

M3 - Article

AN - SCOPUS:85018181679

VL - 64

SP - 123

EP - 137

JO - Scientific Annals of Economics and Business

JF - Scientific Annals of Economics and Business

SN - 2501-1960

IS - 1

ER -