Export Experience and the Choice of Invoice Currency: Evidence from a Questionnaire Survey of Japanese SMEs
33 Pages Posted: 14 Dec 2023
Abstract
This study examines the determinants of invoice currency, focusing on the effect of export experience based on a questionnaire survey of Japanese small and medium enterprises (SMEs) in the manufacturing industry. We find that exporters with extensive export experience tend to switch the invoice currency from the home currency to foreign currencies. The interpretation is that export experience mitigates the exchange rate uncertainty firms face and enables them to use foreign currency in their exports. This effect persists even if firms did not export in some years since they started exporting. We also find that the home currency is more likely to be chosen in the first export when the age of the exporter is higher, the total sales of the exporter are smaller, the exporter has an initiative to determine the invoice currency, and the exporter started exporting before the global financial crisis in 2007.
Keywords: Invoice currency, Export dynamics, Questionnaire survey, SMEs, Japan
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