Credit Allocation Decisions of Wheat Exporting Countries

Abstract

Decision processes and factors determining allocations of credit guarantees for wheat purchases by major exporting countries are analyzed in this study. Results show that, in cases of the United States and Canada, discrete decisions are made first, followed by decisions on how much to guarantee, including zero guarantees. The European Community (EC) makes these two decisions concurrently. Important factors explaining credit decisions are market share, the recipient country's market size and the existence of credit by competitor exporting countries. All exporting countries’decisions are affected by the existence of the competitor countries’credit programs in particular import markets. U.S. decisions are most sensitive to market share and Canadian decisions to other exporting countries’provision of credit. The EC's decisions are affected primarily by market share and the existence of competitor programs.