Arab Exports and Creditworthiness Are there Real Needs for Specialized Export Credit Institutions?

The scarcity of affordable and opportune trade financing schemes, including export credit guarantee programs, has been part of the cause to the fairly modest trade growth recorded during the last five years. In view of that, it is important further investigating this matter to better understand the nexuses between financing/risk mitigation and trade performance. The existing literature on the effect of export credit insurance programs on export promotion are mainly focused on European countries. On the other hand, very little is known about the influence of export credit guarantees on exports in the Arab region, where the structure of export industries and key trading partners differ significantly from other regions. The purpose of this paper is to bridge this gap in the literature by investigating empirically the significance of the relationship between exports and credit-worthiness of importing countries, using data on Arab merchandise export values. Corroborating evidence for this type of rapport would provide scientific backing to the practicality of specialized export financial institutions to financing exports, mitigating credit risk, and preventing trade finance markets in Arab countries from drying up. A dynamic panel approach is adopted in this paper and the empirical results, based on a balanced panel of 107 Arab partner countries (importer countries) observed between 1997 and 2017, provide a strong and robust validation of the valuable role export credit insurance and guarantee programs can play in promoting merchandise exports in the Arab region