Global Financial Crisis, Export Credit Insurance, and Scope Adjustment of Multiproduct Exporting Firms

Hea-Jung Hyun and Jung Hur

No 2106, Working Papers from Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy)

Abstract: We examine the role of export credit insurance (ECI) in Korea during two periods of financial crisis by focusing on insured exporting firms' response on the scope of exported products and destination countries. Using unique Korean firm-level data over 1995–2010, our empirical analyses show that during financial crises (e.g., the 1998 Asian financial crisis and the 2008 global financial crisis), multiproduct firms reduced the scope of their export products and the number of destination countries. However, firms with above-median levels of ECI reduced the scope of product and country significantly less than firms with below-median ECI. Core products were less likely to be dropped during the two crisis periods. After the 2008 global financial crisis, countries with high political risk and a low level of financial development were less likely to be dropped from the export market portfolios of firms with high ECI. These findings may imply that larger ECI may be related to higher risk-taking behavior of exporters under asymmetric information.

Keywords: Product Scope; Country Diversification; Export Credit Insurance; Global Financial Crisis (search for similar items in EconPapers)
JEL-codes: D22 F13 F34 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2021
New Economics Papers: this item is included in nep-ias, nep-int, nep-rmg and nep-sea
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