The Relationship Between Exports, Credit Risk And Credit Guarantees
AbstractThis paper provides an understanding of how the export credit worthiness of an importing country affects export sales of agricultural and other manufactured products and how export credit guarantees or insurance can mitigate risks of non-payment. A theoretical model is developed. It shows how risk mitigation through export credit insurance could increase exports to high risk importing countries. The key result is that the export response curve is more inelastic in the presence of payment risk, and the effect of insurance is to make the export curve more elastic. Statistical evidence supports this fundamental premise.
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Bibliographic InfoPaper provided by University of Guelph, Department of Food, Agricultural and Resource Economics in its series Working Papers with number 34115.
Date of creation: 2002
Date of revision:
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