IDEAS home Printed from https://ideas.repec.org/a/prg/jnlpep/v2021y2021i2id762p156-170.html
   My bibliography  Save this article

Problems with Long-term Financial Sustainability of Export Credit Agencies

Author

Listed:
  • Mikuláš Pýcha

Abstract

This paper focuses on national support for export and examines whether, following the OECD arrangement, long-term financial sustainability is assured without sustained fiscal help. Rules on permitted state support in this area are stated by the OECD Consensus, which is meant to guarantee a level playing field for all exporters, to encourage competition among exporters based on the quality and prices of goods, and at the same time, not distort the free market. The main objective is that every export credit agency (ECA) should be self-sustainable with no need for state subsidies. However, this may not be achieved. This research proves inadequacy of minimum premium rates (MPR) due to insured interest. This issue arises mainly from the application of MPRs to the principal value of the insured loan with no correspondence to the insured interest amount. As many ECAs are publicly owned, all systematic losses must be covered by state budgets, which is against OECD agreements and is not allowed.

Suggested Citation

  • Mikuláš Pýcha, 2021. "Problems with Long-term Financial Sustainability of Export Credit Agencies," Prague Economic Papers, Prague University of Economics and Business, vol. 2021(2), pages 156-170.
    • Handle: RePEc:prg:jnlpep:v:2021:y:2021:i:2:id:762:p:156-170
    DOI: 10.18267/j.pep.762
    as

    Download full text from publisher

    File URL: http://pep.vse.cz/doi/10.18267/j.pep.762.html
    Download Restriction: free of charge
    File URL: http://pep.vse.cz/doi/10.18267/j.pep.762.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.18267/j.pep.762?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Karel Janda & Eva Michalikova & Jiri Skuhrovec, 2012. "Credit Support for Export: Evidence from the Czech Republic," CERGE-EI Working Papers wp461, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Janda, Karel & Kravtsov, Oleg, 2016. "Interdependencies between Leverage and Capital Ratios in the Central and Eastern European Banks," MPRA Paper 74560, University Library of Munich, Germany.
    2. Ali Polat & Mehmet Yesilyaprak, 2017. "Export Credit Insurance and Export Performance: An Empirical Gravity Analysis for Turkey," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(8), pages 12-24, August.
    3. Janda, Karel & Kravtsov, Oleg, 2016. "Interdependencies between Leverage and Capital Ratios in the Banking Sector of the Czech Republic," MPRA Paper 74457, University Library of Munich, Germany.
    4. Inga Heiland & Erdal Yalcin, 2021. "Export market risk and the role of state credit guarantees," International Economics and Economic Policy, Springer, vol. 18(1), pages 25-72, February.
    5. Agarwal, Natasha & Chan, Jackie M.L. & Lodefalk, Magnus & Tang, Aili & Tano, Sofia & Wang, Zheng, 2023. "Mitigating information frictions in trade: Evidence from export credit guarantees," Journal of International Economics, Elsevier, vol. 145(C).
    6. Janda, Karel, 2014. "Czech Export Credit Agencies and their Market Power," MPRA Paper 54097, University Library of Munich, Germany.
    7. Petr Suler & Zuzana Rowland & Tomas Krulicky, 2021. "Evaluation of the Accuracy of Machine Learning Predictions of the Czech Republic’s Exports to the China," JRFM, MDPI, vol. 14(2), pages 1-30, February.
    8. Thomas Url, 2016. "Gesamtwirtschaftliche Auswirkungen der Exportgarantien in Österreich," WIFO Studies, WIFO, number 58839, April.
    9. Tereza Fišerová & Petr Teplý & David Tripe, 2015. "The Performance of Foreign-Owned Banks in Host Country Economies," Prague Economic Papers, Prague University of Economics and Business, vol. 2015(5), pages 538-561.
    10. Janda, Karel & Kravtsov, Oleg, 2017. "Micro-Level Evidences of Moral Hazard in the European Financial Institutions," MPRA Paper 77233, University Library of Munich, Germany.
    11. Mikuláš Pýcha, . "Problems with Long-term Financial Sustainability of Export Credit Agencies," Prague Economic Papers, Prague University of Economics and Business, vol. 0.
    12. Karel Janda & Oleg Kravtsov, 2018. "Micro-level Evidences of Moral Hazard in the European Financial Institutions," Springer Proceedings in Business and Economics, in: David Procházka (ed.), The Impact of Globalization on International Finance and Accounting, pages 89-98, Springer.
    13. Hea-Jung Hyun & Jung Hur, 2021. "Global Financial Crisis, Export Credit Insurance, and Scope Adjustment of Multiproduct Exporting Firms," Working Papers 2106, Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy).
    14. 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.
    15. Karel Janda & Oleg Kravtsov, 2018. "Basel III Leverage and Capital Ratio over the Economic Cycle in the Czech Republic and its Comparison with the CEE Region," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2018(4), pages 5-23.
    16. Karel Janda, 2014. "Export Credit Agencies in the Czech Republic and Their Market Power," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 15(03), pages 45-51, August.
    17. Predrag D. Radojevic & Darko Marjanovic & Tatjana Radovanov, 2014. "The Impact of Firms' Characteristics on Export Barriers' Perception: A Case of Serbian Exporters," Prague Economic Papers, Prague University of Economics and Business, vol. 2014(4), pages 426-445.

    More about this item

    Keywords

    State support; export credit; minimum premium rates; OECD consensus; export credit agency;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlpep:v:2021:y:2021:i:2:id:762:p:156-170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.