This paper examines the demand for import documentary credit in Lebanon. Five explanatory variables are selected that stand respectively for risk, price, size, conjecture, and availability of credit. As expected, the long run elasticities are significantly higher than the short run ones. Risk has an adverse impact. Interest rate elasticities, or price elasticities, are all negative and statistically significant except for bills for collection which are paid in cash at presentation of the

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... g documents, and that do not depend on the interest rate. Size and conjectural elasticities are all positive and statistically significantly different from zero. As expected, the availability of credit is only important for opened and utilized letters of credit and not for outstanding documentary credit and bills for collection. In the long run risk, price, and conjectural elasticities are all statistically insignificantly different from one in absolute values, but, surprisingly, long run size elasticities are statistically significantly less than +1. The paper concludes that the determinants of the demand for import documentary credit in Lebanon are similar to those of the demand for any other good or asset. Keywords: documentary credit, demand function, log-log specification, ratio of documentary credit on imports, risk elasticity, price elasticity, size elasticity, conjectural elasticity, credit availability elasticity, short run and long run elasticities Documentary credits finance international trade. If a US importer wants to purchase goods from a British exporter, and both importer and exporter do not know each other well enough to trust each other, then a documentary credit is the alternative. The importer enjoins his bank to pay the full amount of the invoice to the banker of the exporter. When the goods arrive at destination, the importer's bank checks the documents attached to the goods, especially the bill of lading, which is a legal title to the merchandise, and if these documents www.ccsenet.org/ibr