Invoicing of Japanese exports and imports: Analysis of granular data by industry and by country
Junko Shimizu, Uraku Yoshimoto, Takatoshi Ito, Kiyotaka Sato, Yushi Yoshida and Taiyo Yoshimi
2025
NBER Working Paper, No.33826 (May)
Abstract
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As a successful competitive research bid to use Japanese customs data, this study calculates the share of trade denomination currency (invoice currency) in Japan's exports and imports by industry and country from individual export and import documents. The results clarify the characteristics of invoice currency choice. The invoice currency share data by industry and country, compiled from customs data, shows each industry's characteristics by country. We confirm that the industry sector of the traded goods plays a role in the choice of invoice currency shares. In addition, we found that invoice currency shares in some industries varied significantly over the sample period from 2014 to 2022. This indicates that heightened geopolitical risks and supply chain restructuring in recent years may affect the choice of invoice currency. We have confirmed a large gap between the average (vs. world) share and the share by individual industry and country. Time-series changes are also remarkable. Our data indicates that the invoice currency shares aggregated in trade with the world do not necessarily reflect changes in invoice currency shares or the actual use of partner country currencies.
Junko Shimizu, Uraku Yoshimoto, Takatoshi Ito, Kiyotaka Sato, Yushi Yoshida and Taiyo Yoshimi
2025
NBER Working Paper, No.33826 (May)
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The myth of U.S. dollar dominance in Japanese exports: New evidence from Japanese customs level data
Uraku Yoshimoto, Kiyotaka Sato, Takatoshi Ito, Junko Shimizu, Yushi Yoshida and Taiyo Yoshimi
2025
NBER Working Paper, No.33748 (May)
Abstract
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While Japanese exports are generally considered invoiced mainly in U.S. dollars (USD), this study presents contrary evidence that most Japanese firms choose yen-invoiced exports. Surprisingly, only the top one percent of firms in size tend to choose USD-invoiced exports, based on the Japan Customs export declaration data that was newly made available to researchers. By conducting fixed-effect panel estimation using the granular Japan Customs transaction data, combined with the most comprehensive firm-level data compiled by the Ministry of Economy, Trade and Industry (METI), we demonstrate that the firm size and the intra-firm export share significantly reduce yen-invoiced exports. Smaller firms with few overseas subsidiaries tend to choose yen-invoiced exports to avoid foreign exchange risk. In contrast, larger firms efficiently manage foreign exchange risk arising from USD-invoiced exports, since they tend to export to overseas subsidiaries and benefit from operational hedging that offsets USD-denominated import payments with export revenues within group companies. Smaller firms would continue to choose yen-invoice exports unless they can benefit from operational hedging.
Uraku Yoshimoto, Kiyotaka Sato, Takatoshi Ito, Junko Shimizu, Yushi Yoshida and Taiyo Yoshimi
2025
NBER Working Paper, No.33748 (May)
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A test of dominant currency hypothesis: Evidence from a non-USD-non-Euro country
Yushi Yoshida, Takatoshi Ito, Junko Shimizu, Kiyotaka Sato, Taiyo Yoshimi and Uraku Yoshimoto
2025
NBER Working Paper, No.33454 (February)
Abstract
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We examine the determinants and the dynamics of the exchange rate pass-through of the Japanese exporters, utilizing the official Customs declaration data. We first estimated the invoicing currency exchange rate pass-through and found that export prices invoiced in producer currency are the most rigid. Among local currency or vehicle currency use, US dollar invoicing is relatively more rigid than non-US dollar invoicing. The destination exchange rate pass-through estimates for local currency invoicing are between 35 and 40 percent, whereas those for Japanese yen or US dollar invoicing are close to complete. In addition, we find these discrepancies are even more accentuated in the longer run by analyzing the dynamics of the exchange rate pass-through.
Yushi Yoshida, Takatoshi Ito, Junko Shimizu, Kiyotaka Sato, Taiyo Yoshimi and Uraku Yoshimoto
2025
NBER Working Paper, No.33454 (February)
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Invoicing currency and exchange rate pass-through in Japanese imports: A panel VAR analysis
Taiyo Yoshimi, Uraku Yoshimoto, Takatoshi Ito, Kiyotaka Sato, Junko Shimizu and Yushi Yoshida
2024
NBER Working Paper, No.32910 (September)
Revised and resubmitted: Journal of the Japanese and International Economies
Abstract
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This study utilizes the granular Japanese customs data from 2014 to 2020 to examine the exchange rate pass-through (ERPT) to Japanese import prices. It mainly focuses on the impact of the invoicing currency choice on ERPT. The ERPT elasticity in products invoiced in the exporter's currency is greater than those invoiced in yen. In the full sample analysis, the ERPT elasticity was 0.75 for products invoiced in the exporter's currency, compared to about 0.19 for yen-invoiced products. We find the same tendency for imports from two Asian powerhouses: China and Thailand. There is no significant difference in the ERPT elasticity between products invoiced in the exporter's currency and those invoiced in a third currency (i.e., a currency other than yen or the exporter's currency). In addition, an asymmetric pass-through is found, namely the ERPT during the appreciation phase of the yen is higher than during the depreciation phase. This finding is interpreted that foreign exporters strengthen their pricing-to-market behavior during the yen depreciation phase to maintain their market share.
Taiyo Yoshimi, Uraku Yoshimoto, Takatoshi Ito, Kiyotaka Sato, Junko Shimizu and Yushi Yoshida
2024
NBER Working Paper, No.32910 (September)
Revised and resubmitted: Journal of the Japanese and International Economies
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Invoice currency choice and its determinants in Japanese trade: New evidence from Japanese customs data
Shimizu, Junko, Kiyotaka Sato, Takatoshi Ito, Yushi Yoshida, Taiyo Yoshimi and Uraku Yoshimoto
2024
PRI Discussion Paper, No.24A-02 (August)
Abstract
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In this study, we use microdata from Japanese customs declarations and calculate semiannual invoice currency shares by country, both on a value and transaction basis. From country-level data, we can confirm the following: First, the impression that Japan's trade is biased toward the U.S. dollar (USD) is mainly due to choices in the U.S., China, and resource-rich countries with large trade volumes. Second, the yen invoicing is selected on a value basis and an even larger transaction number basis, and the local currency invoicing is also used on a bilateral country basis. Third, the choice of invoice currency has changed in recent years. From 2014 to 2020, the USD lost the most shares, falling in 23 of the 34 countries. By conducting an empirical analysis exploring the determinants of invoice currency, our main findings confirm that the intermediate goods trade share has the effect of reducing Yen and increasing USD invoicing in export, while the higher the inflation gap, the more likely one is to use USD invoicing, which suggests that Japanese firms will be further exposed to foreign exchange risk in the future.
Shimizu, Junko, Kiyotaka Sato, Takatoshi Ito, Yushi Yoshida, Taiyo Yoshimi and Uraku Yoshimoto
2024
PRI Discussion Paper, No.24A-02 (August)
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Economies of scale in raw milk production: Evidence from Japanese farm-level data
Ayano Sato, Taiyo Yoshimi and Takatoshi Ito
2024
IERCU Discussion Paper No.402 (May)
Abstract
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Raw milk production in Japan is subject to various restrictions, including mandating sales to agricultural cooperatives, limits to inter-regional mobility of raw milk, and differentiated prices of raw milk for different dairy products with no say from raw milk farmers. These institutional barriers contribute to inefficiency in production. This paper estimates a translog cost function of raw milk production from individual Japanese dairy farms. Using newly-available farm-level data from 2008 to 2017, we examine the degree of scale economies in raw milk production. Our findings indicate the following: (i) Economies of scale do exist in raw milk production in Japan. The total cost increases only by 0.67% for a 1% increase in production. (ii) Substitutability exists between labor and equipment, suggesting the potential for improving productivity by introducing more mechanization (automation). Simulation analyses, based on the estimated cost function, are conducted to measure the impacts of removing institutional rigidities (multiple prices; regional division of markets) on the profitability of dairy farms by farm scale and region. Results show that removing institutional rigidity tends to increase the profitability of Japanese dairy farms in general, but the magnitude of the effect impact varies across farm scales and regions.
Ayano Sato, Taiyo Yoshimi and Takatoshi Ito
2024
IERCU Discussion Paper No.402 (May)
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Payment method and invoicing currency: Evidence from Turkish textile and clothing exports
Kemal Türkcan, Yushi Yoshida and Taiyo Yoshimi
2024
Available at Research Square (May)
Abstract
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This study examines how the payment method affects the choice of invoicing currency. Focusing on Turkish textile and clothing exports, it finds that exporters using the open account method, where payment is made after goods are received, prefer to invoice in their home currency (Turkish lira) to mitigate exchange rate risks associated with foreign currencies. This preference is more pronounced among small and medium-sized enterprises. We also find that the euro, the predominant foreign currency in our Turkish sample, is less likely to be used under the OA method. Additionally, the Turkish lira is more likely chosen as the invoicing currency when its value is higher, when exporting to fewer countries, or by less productive exporters.
Kemal Türkcan, Yushi Yoshida and Taiyo Yoshimi
2024
Available at Research Square (May)
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Invoicing currency choice: Strategic complementarities and currency matching
Yushi Yoshida, Junko Shimizu, Takatoshi Ito, Kiyotaka Sato, Taiyo Yoshimi and Uraku Yoshimoto
2024
NBER Working Paper, No.32276 (March)
Abstract
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Japanese exporters' choice of invoice currencies is investigated using newly available official Customs declaration data, which records detailed information, including the trading partners' names, invoicing currency, and product descriptions. The strategic complementarity mechanism, that is, choosing the same invoice currency as others in the same industry or the same destination market, is found among Japanese exporters. We propose the “broad two-way exporters” whose export destinations and import origins do not necessarily match and the “narrow two-way
exporters” whose export destination and import origins match in the same year. It is found that currency matching for exports and imports is as essential as strategic complementarity for two-way exporters, regardless of dominant currency, producer currency, or local currency invoicing. However, as one of this paper's novelty, we found evidence that newly entering two-way exporters are less concerned about currency matching. Therefore, the currency matching mechanism for two-way exporters is gradually formed as they continue to survive in international markets.
Yushi Yoshida, Junko Shimizu, Takatoshi Ito, Kiyotaka Sato, Taiyo Yoshimi and Uraku Yoshimoto
2024
NBER Working Paper, No.32276 (March)
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Export dynamics and invoicing currency
Kazunobu Hayakawa, Nuttawut Laksanapanyakul, Toshiyuki Matsuura and Taiyo Yoshimi
2024
KeioIES Discussion Paper Series, DP2024-005 (March)
Abstract
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This study explores the evolution of invoicing currency choice, focusing on inertia in invoicing currency and the role of export experience. We theorize that inertia in the producer's currency pricing (PCP) weakens with lower forex risk management costs, whereas inertia in foreign currency pricing is more pronounced under similar conditions. For the export experience, exporters tend to adopt PCP when they start exporting if the costs are significant. Empirical analysis using firm-level export data in Thailand from 2007 to 2014 supports these predictions. Specifically, we show that the inertia in PCP diminishes with access to forward exchange contracts or when the importer's currency has a higher forex turnover than the Thai baht. We also show that the tendency to adopt PCP in first exports diminishes under these conditions. Our findings imply that exporters initially prefer invoicing in their own currency, but this preference decreases as export experience accumulates or if there are financial tools or favorable currency turnover conditions.
Kazunobu Hayakawa, Nuttawut Laksanapanyakul, Toshiyuki Matsuura and Taiyo Yoshimi
2024
KeioIES Discussion Paper Series, DP2024-005 (March)
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Invoice currency choice in intra-firm trade: A transaction-level analysis of Japanese automobile exports
Taiyo Yoshimi, Uraku Yoshimoto, Kiyotaka Sato, Takatoshi Ito, Junko Shimizu and Yushi Yoshida
2024
NBER Working Paper, No.32142 (February)
Abstract
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This study empirically investigates how the invoice currency choice differs between intra-firm and arm's-length exports. We also examine whether other firm- and product-level characteristics affect the choice of invoice currency. This study is the first to be granted access to highly disaggregated transaction-level trade data for Japan. Focusing on Japanese automobile exports to France, we demonstrate that the importer's currency tends to be chosen in intra-firm export invoicing based on a panel logit estimation. Our empirical findings remain robust when different types of intra-firm export variables and other conventional explanatory variables are introduced, such as firm and product market share, exchange rate volatility, a dummy for intermediate goods exports, euro-invoiced imports, labor productivity, and research and development intensity. Given growing intra-firm trade and expanding global value chains, Japanese parent firms tend to invoice in the importers' currency, assuming the foreign exchange risk that arises from intra-firm trade. Thus, exchange rate risk management is a significant consideration for Japanese parent firms.
Taiyo Yoshimi, Uraku Yoshimoto, Kiyotaka Sato, Takatoshi Ito, Junko Shimizu and Yushi Yoshida
2024
NBER Working Paper, No.32142 (February)
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Export experience and the choice of invoice currency: Evidence from a questionnaire survey of Japanese SMEs
Mizuki Goto, Kazunobu Hayakawa, Satoshi Koibuchi and Taiyo Yoshimi
2023
Available at SSRN (December)
Abstract
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This study examines the determinants of invoice currency with a focus 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 Japanese yen to foreign currencies. The interpretation is that export experience mitigates the exchange rate uncertainty faced by firms and enables them to use foreign currency in their exports. This effect persists even if firms intermittently export from their first exports. We also find that the yen is more likely to be chosen as the first export when the age of the exporter is higher, the sales value of the exporter is smaller, the exporter has an initiative to determine the invoice currency, and the exporter started exporting before the global financial crisis in 2007.
Mizuki Goto, Kazunobu Hayakawa, Satoshi Koibuchi and Taiyo Yoshimi
2023
Available at SSRN (December)
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Cash-in-advance payments and transaction size: Cash-constrained importers
Yushi Yoshida, Kemal Türkcan and Taiyo Yoshimi
2022
RIETI Discussion Paper, 22-E-051 (May)
Abstract
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A high-productivity exporter can gain a stronger position over an importer in determining how and when payment is made. With the lower risk associated with exporters, cash-in-advance (CIA) payment is their preferred method of payment. However, a baseline probit regression for the Turkish export dataset at the transaction level did not find a positive relationship between exporters' productivity and CIA. This puzzling finding is reconciled when we consider the financial conditions of importers, which may not allow for advance payment, especially for a large cash transaction. We find that increasing transaction size discourages the use of CIA payments. We also find that the productivity of exporters is associated non-linearly, i.e., in an inverted-U shape, with the use of CIA payments.
Yushi Yoshida, Kemal Türkcan and Taiyo Yoshimi
2022
RIETI Discussion Paper, 22-E-051 (May)
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Invoice currency choice under financial constraints and bargaining: Evidence from Japanese SMEs
Mizuki Goto, Kazunobu Hayakawa, Satoshi Koibuchi and Taiyo Yoshimi
2021
RIETI Discussion Paper, 21-E-080 (October)
Abstract
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Recent empirical studies explore factors behind the currency invoicing pattern in exports of listed firms by using questionnaire surveys; however, there is insufficient evidence regarding small and medium-sized enterprises (SMEs). We conducted a questionnaire survey for 2,100 unlisted manufacturers engaged in exports during the 2010s and received responses from 300 firms. By constructing a database with invoice currency choice and trade partner by export destination, we empirically examine the determinants of invoice currency choice in export using the probit model estimation. We confirm that the major determinants of currency invoicing in existing research effectively work as determinants of currency invoicing by SMEs. After controlling for various determinants, we found that financial constraints play an important role in their invoice currency choice. The firms with deteriorated capital ratios and rapid sales growth depend more on the producer's currency invoicing. The results are confirmed through a robustness test using detailed financial data, showing that the firms with lower capital ratios, lower liquidity positions, and greater investment opportunities tend to use the producer's currency invoicing. These novel findings are consistent with the predictions from the theoretical research on the bargaining model of currency invoicing and corporate risk management for hedging.
Mizuki Goto, Kazunobu Hayakawa, Satoshi Koibuchi and Taiyo Yoshimi
2021
RIETI Discussion Paper, 21-E-080 (October)
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The dollar, the yen, or the RMB? A survey data analysis of invoicing currencies among Japanese overseas subsidiaries
Takatoshi Ito, Satoshi Koibuchi, Kiyotaka Sato, Junko Shimizu and Taiyo Yoshimi
2021
RIETI Discussion Paper, 21-E-016 (March)
Abstract
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The purpose of this study is to analyze the factors that promote the usage of local currencies in Japanese trade in Asia by utilizing a large-scale firm-level questionnaire survey in 2018 on Japanese overseas subsidiaries in Asia and to discover why the usage of Asian currencies has increased recently. The major findings are as follows: first, with respect to the choice of invoicing currency, subsidiaries with large sales tended to choose the U.S. dollar while those with small sales tended to choose the yen or local currency; second, subsidiaries established for sales to the local market tended to choose the local currency; third, overseas subsidiaries tended to unify the transaction currency on both the import and export sides, a practice called the natural hedge; fourth, subsidiaries with large local currency borrowing, a high share of local procurement, and a joint venture with local firms who try to maximize their profits measured using local currency, tend to adopt local currency invoicing. These results suggest that the role of the U.S. dollar as the main invoice currency is in decline, as Japanese exporting firms move away from using Asian subsidiaries as
a platform to export to the United States and increasingly use Asian subsidiaries as a local sales base in Asian countries and an export platform to China and back to Japan.
Takatoshi Ito, Satoshi Koibuchi, Kiyotaka Sato, Junko Shimizu and Taiyo Yoshimi
2021
RIETI Discussion Paper, 21-E-016 (March)
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