Growth insured: export credit insurance and trade

We estimate the causal effect of short-term export credit insurance (ECI) on firm-level exports using administrative data from China's export credit agency merged with customs and tax records. Exploiting quasi-random variation in ECI approval from buyer-level credit ceilings and a first-come-first-served allocation rule, combined with propensity score matching and two-stage least squares, we find that a 10% increase in insured coverage raises firm-destination exports by approximately 2.3%. ECI expands exports along both intensive and extensive margins, raising product scope and destination entry, while leaving unit values unchanged. Effects are largest for smaller and private firms, financially constrained exporters, and shipments to riskier destinations, and were amplified during the 2008 financial crisis. Balance-sheet evidence points to two channels: insured receivables become more pledgeable, relaxing short-term liquidity constraints, and payment risk is mitigated. Back-of-the-envelope calculations imply a GDP-based benefit-cost ratio of approximately 2.7, suggesting substantial social returns from ECI.