Export Market Risk and the Role of State Credit Guarantees

43 Pages Posted: 4 Feb 2015

See all articles by Inga Heiland

Inga Heiland

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Erdal Yalcin

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute; University of Applied Sciences Konstanz

Date Written: January 30, 2015

Abstract

Many countries offer state credit guarantee programs to improve access to finance for exporting firms. In the case of Germany, accumulated returns to the scheme deriving from risk-compensating premia have outweighed accumulated losses over the past 60 years. Why do private financial agents not step in? We build a simple model with heterogeneous firms that rationalizes demand for state guarantees with specific cost advantages of the government. We test the model’s predictions with detailed firm-level data and find supportive evidence: State credit guarantees in Germany increase firms’ exports. This effect is stronger for firms that are dependent on external finance, if the value at risk is large, and at times when refinancing conditions are tight.

Keywords: state export credit guarantees, credit constraints

JEL Classification: F360, G280, H250, H810

Suggested Citation

Heiland, Inga and Yalcin, Erdal and Yalcin, Erdal, Export Market Risk and the Role of State Credit Guarantees (January 30, 2015). Available at SSRN: https://ssrn.com/abstract=2559743 or http://dx.doi.org/10.2139/ssrn.2559743

Inga Heiland

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Erdal Yalcin (Contact Author)

University of Applied Sciences Konstanz ( email )

Alfred-Wachtel-Straße 8
Konstanz, 78462
Germany

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
135
Abstract Views
756
rank
274,199
PlumX Metrics