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The Relationship Between Exports, Credit Risk And Credit Guarantees


  • Rienstra-Munnicha, Paul
  • Turvey, Calum G.


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.

Suggested Citation

  • Rienstra-Munnicha, Paul & Turvey, Calum G., 2002. "The Relationship Between Exports, Credit Risk And Credit Guarantees," Working Papers 34115, University of Guelph, Department of Food, Agricultural and Resource Economics.
  • Handle: RePEc:ags:uguewp:34115

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    References listed on IDEAS

    1. Brainard, William C. & Cooper, Richard N., 1968. "Uncertainty and Diversification in International Trade," Food Research Institute Studies, Stanford University, Food Research Institute, issue 03.
    2. Filip Abraham & Gerda Dewit, 2000. "Export Promotion Via Official Export Insurance," Open Economies Review, Springer, vol. 11(1), pages 5-26, January.
    3. Anderson, James E & Riley, John G, 1976. "International Trade with Fluctuating Prices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(1), pages 76-97, February.
    4. Ruffin, Roy J., 1974. "International trade under uncertainty," Journal of International Economics, Elsevier, vol. 4(3), pages 243-259, August.
    5. Grinols, Earl L, 1985. "Trade, Distortions, and Welfare under Uncertainty," Oxford Economic Papers, Oxford University Press, vol. 37(3), pages 362-374, September.
    6. Eaton, Jonathan, 1979. "The Allocation of Resources in an Open Economy with Uncertain Terms of Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(2), pages 391-403, June.
    7. Gerda Dewit, 1996. "Export Insurance Subsidisation: Risk Coverage, Strategic Export Promotion or Aid?," Working Papers 9614, Business School - Economics, University of Glasgow.
    8. Rude, James, 2000. "Reform of Agricultural Export Credit Programs," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 1(01).
    9. Howard D. Leathers, 2001. "Agricultural Export Subsidies as a Tool of Trade Strategy: Before and after the Federal Agricultural Improvement and Reform Act of 1996," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 209-221.
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    Cited by:

    1. repec:spr:annopr:v:240:y:2016:i:2:d:10.1007_s10479-014-1602-x is not listed on IDEAS
    2. 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.
    3. 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.

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    International Relations/Trade;


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