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The Relationship between Exports, Credit Risk and Credit Guarantees

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  • Paul Rienstra-Munnicha
  • Calum G. Turvey

Abstract

This 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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Suggested Citation

  • Paul Rienstra-Munnicha & Calum G. Turvey, 2002. "The Relationship between Exports, Credit Risk and Credit Guarantees," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 50(3), pages 281-296, November.
    • Handle: RePEc:bla:canjag:v:50:y:2002:i:3:p:281-296
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    File URL: http://hdl.handle.net/10.1111/j.1744-7976.2002.tb00338.x
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    Cited by:

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    2. Ben Jelili Riadh, 2020. "Do Default Loss Risks Matter for Arab Exports? Evidence from a Gravity Modelling Approach," Review of Middle East Economics and Finance, De Gruyter, vol. 16(3), pages 1-22, December.
    3. Zheng, J., 2012. "Essays on pensions, health expectancy and credit insurance," Other publications TiSEM 922b794a-7d11-4463-9843-8, Tilburg University, School of Economics and Management.
    4. Christoph Moser & Thorsten Nestmann & Michael Wedow, 2008. "Political Risk and Export Promotion: Evidence from Germany," The World Economy, Wiley Blackwell, vol. 31(6), pages 781-803, June.
    5. Sriyanto Sriyanto & Muhammad Imran & Shiraz Khan & Khalid Zaman & Haroon ur Rashid Khan & ?Dadang Yunus Lutfiansyach? & Parmono Parmono & Abdul Wahab Pathath & Mohd Khata Jabor, 2023. "Harnessing the Power of Globalization: A Study of the Association between Globalization, Transportation Energy, and Insurance and Financial Services in Europe and Central Asia," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 453-461, March.
    6. Hyelin Choi & Kyunghun Kim, 2021. "Effect of Export Credit Insurance on Export Performance: An Empirical Analysis of Korea," Asian Economic Journal, East Asian Economic Association, vol. 35(4), pages 413-433, December.
    7. Jing Qin & Kun Qin & Yuxiang Cheng & Desheng Wu, 2022. "Trade Credit Insurance for the Capital-Constrained Supplier," Sustainability, MDPI, vol. 14(21), pages 1-19, October.

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