An Empirical Study On Firms’ Command Over Transactions With Letter Of Credit And Formation Of Reserves Offset

Abstract

The most important one of the issues essential to payment process in foreign trade transactions is payment through the letter of credit. The rate of encountering problematic cases in import credit practices in Turkey is relatively high as compared to the world average. In this study, the firms’ command in practice over payment through letter of credit and the situations in which they experience problems of reserves offset have been investigated. For this purpose, the data have been collected through a questionnaire study conducted by making face-to-face interviews with the authorized persons of 42 corporations which are located and currently operate in the big industry zones of Bursa, the second city in terms of foreign trade performance for the years 2014, 2015 and 2016. The results of the analyses carried out within the scope of the study obtained are examined these firms’ command of transactions through letter of credit and the frequency of living problems about reserves offset.