Credit Access and Market Access: Evidence From a Portuguese Credit Guarantee Scheme

Claudia Custodio, Christopher Hansman and Bernardo Mendes

No 19049, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We show that credit access is a key barrier to exporting. We analyze a government scheme that provided credit guarantees to Portuguese SMEs. Regression discontinuity estimates, based on program eligibility criteria, indicate that qualifying firms are more likely to export and to expand their export activity. Credit access has persistent effects, disproportionately impacting not-yet exporters and smaller firms. Our results support international trade models in which credit allows firms to overcome sunk entry costs, leading to hysteresis in trade. We propose two sources of these costs — trust-building and quality upgrading — and show that government guarantees promote access to foreign markets.

Keywords: Exports; Trade (search for similar items in EconPapers)
JEL-codes: F10 F14 G28 (search for similar items in EconPapers)
Date: 2024-05
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