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Mitigating Information Frictions in Trade: Evidence from Export Credit Guarantees

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  • Lodefalk, Magnus

    (The Ratio Institute)

  • Tangz Sofia Tano, Aili

    (Örebro University)

  • Agarwal, Natasha

    (World Education Foundation)

  • Wang, Zheng

    (University of Nottingham)

Abstract

Information frictions make non-simultaneous exchange risky, particularly across borders. Therefore, many countries insure cross-border exchange. We investigate the effects on firm trade, jobs, value added and productivity, using uniquely detailed, comprehensive and longitudinal transaction-level Swedish data on insurance and granular data on exporters and foreign buyers. For identification, we employ matching and differencein- difference and fuzzy regression discontinuity estimators and exploit a quasi-natural experiment. We find strikingly heterogeneous effects across firm size and response variables. The strongest positive effects are for small traders and new users. Overall, the evidence suggests a causal link from export insurance to firm performance.

Suggested Citation

  • Lodefalk, Magnus & Tangz Sofia Tano, Aili & Agarwal, Natasha & Wang, Zheng, 2018. "Mitigating Information Frictions in Trade: Evidence from Export Credit Guarantees," Ratio Working Papers 316, The Ratio Institute, revised 23 Apr 2021.
    • Handle: RePEc:hhs:ratioi:0316
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    More about this item

    Keywords

    Information friction; Institutions; Export insurance; Credit Constraints; Trade; Firm Performance;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • 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
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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