The Role of Export Incentives and Bank Credit on the Export Survival of Firms in India During COVID-19

Radeef Chundakkadan, Subash Sasidharan and Ketan Reddy

Emerging Markets Finance and Trade, 2025, vol. 61, issue 10, 3110-3127

Abstract: This study examines the impact of government support and bank dependency on the export survival of Indian firms during the COVID-19 pandemic. The pandemic resulted in severe financial constraints for many firms, with a notable decline in exports across various sectors. Utilizing firm-level data from the Centre for Monitoring Indian Economy (CMIE) Prowess database, the study use panel probit model to analyze the relationship between government support, bank dependency, and export survival in the context of an emerging economy, India. Findings indicate that government support positively correlates with export survival, and bank-dependent firms exhibit a higher likelihood of enduring the crisis. However, the study reveals no significant complementarity or substitutability between fiscal incentives and bank loans regarding export survival. These results underscore the necessity for policymakers to enhance credit availability for export firms facing financial challenges. These results are applicable to both the manufacturing and services sector, stand-alone firms, and business group affiliates. Our results remain robust while employing alternative proxies for the primary variable of interest and different methodologies.

Date: 2025
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DOI: 10.1080/1540496X.2025.2474718

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