Export credit risks and the trade credit offer: Some Canadian evidence

Not getting paid for an export sale is a fundamental problem in international business which export credit managers try to avoid. Nevertheless, the export credit decision remains largely neglected by researchers, with little known about the actual impact of export credit risks on the trade credit offer. This paper presents empirical data from a survey of Canadian export credit managers to address questions about the relative importance of the various standard commercial and export-specific risks: whether country risks lead export credit managers to view a foreign buyer's creditworthiness differently and whether export credit risks are actively managed in the trade credit offer. The findings demonstrate that existing trade credit models are insufficient to explain the export credit decision. New trade credit models which integrate both standard commercial and export-specific risks must be developed for export sales.