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Evaluating the Impact of Export Finance Support On Firm-level Export Performance: Evidence from Pakistan

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  • Defever, F.
  • Riaño, A.
  • Varela, G.

Abstract

This paper evaluates the impact of two export finance support schemes: The Export Finance Scheme (EFS) and the Long-Term Finance Facility for Plant & Machinery (LTFF) on firm-level export performance. These policies offer loans to exporters at concessionary interest rates to finance short-term working capital and long-term investment in machinery and equipment respectively. To do so, we combine customs data with information about which firms participate in each scheme and the value of the loans they obtain between 2015 and 2017. We find that EFS and LTFF increased the growth rate of exports sales by 7 and 8-11 percentage points respectively. Neither policy exerts a significant impact on the number of products that a firm exports or the number of foreign countries it sells to. Our analysis indicates that facilitating long-term investment in physical capital is more cost effective to raise exports than subsidizing exporters' working capital needs.

Suggested Citation

  • Defever, F. & Riaño, A. & Varela, G., 2020. "Evaluating the Impact of Export Finance Support On Firm-level Export Performance: Evidence from Pakistan," Working Papers 20/14, Department of Economics, City University London.
    • Handle: RePEc:cty:dpaper:20/14
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    4. Ghulam Mustafa & Saqib Hussain, 2023. "What are the Factors Making Pakistan’s Exports Stagnant? Insight from Literature Review," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 62(3), pages 449-460.

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance

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