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Mitigating informat...
Mitigating information frictions in trade : Evidence from export credit guarantees
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- Agarwal, N. (author)
- 64-C, Mittal Towers, Nariman Point, Mumbai, India
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- Chan, J.M.L. (author)
- Department of Economics and Business Economics, Aarhus University, Aarhus, Denmark
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- Lodefalk, Magnus, 1969- (author)
- Örebro universitet,Handelshögskolan vid Örebro Universitet,Global Labor Organization, Essen, Germany; Ratio, Stockholm, Sweden
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- Tang, Aili, 1983- (author)
- Örebro universitet,Handelshögskolan vid Örebro Universitet,Department of Economics
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- Tano, S. (author)
- Swedish Agency for Growth Policy Analysis, Stockholm, Sweden
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- Wang, Z. (author)
- Faculty of Business and Law, De Montfort University, The Gateway, Leicester, United Kingdom; GEP, University of Nottingham, Nottingham, United Kingdom
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(creator_code:org_t)
- Elsevier, 2023
- 2023
- English.
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In: Journal of International Economics. - : Elsevier. - 0022-1996 .- 1873-0353. ; 145
- Related links:
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https://doi.org/10.1...
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https://urn.kb.se/re...
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https://doi.org/10.1...
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Abstract
Subject headings
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- Information frictions make foreign trade risky. In particular, the risk of buyer default deters firms from selling abroad. To address this issue, many countries offer export credit guarantees to provide insurance to exporters. In this paper, we investigate the causal effects of guarantees by exploiting a quasi-natural experiment in Sweden and rich register data on guarantees, firms and trade. Estimates from a fuzzy regression discontinuity design show large positive effects on the probability of exporting and the value of exports to the destination for which the guarantees are issued. These results are robust to an alternative approach using a difference-in-differences matching estimator. Further findings suggest that guarantees impact firms heterogeneously and play an important role in resolving buyer default risk and easing liquidity constraints. Larger impacts are observed in non-OECD countries, on smaller, liquidity constrained exporters and for firms selling products that face a relatively high cost of buyer default.
Subject headings
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business -- Economics (hsv//eng)
Keyword
- Buyer default
- Export credit guarantees
- Firm performance
- Information frictions
- Liquidity constraints
- Trade
Publication and Content Type
- ref (subject category)
- art (subject category)
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