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Mitigating Information Frictions in Trade: Evidence from Export Credit Guarantees

Magnus Lodefalk, Aili Tangz Sofia Tano (), Natasha Agarwal () and Zheng Wang ()
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Aili Tangz Sofia Tano: Örebro University
Zheng Wang: University of Nottingham

No 316, Ratio Working Papers from The Ratio Institute

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.

Keywords: Information friction; Institutions; Export insurance; Credit Constraints; Trade; Firm Performance (search for similar items in EconPapers)
JEL-codes: D22 F14 F36 G28 G32 H81 L25 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2018-12-27, Revised 2021-04-23
New Economics Papers: this item is included in nep-eur and nep-int
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Working Paper: Mitigating Information Frictions in Trade: Evidence from Export Credit Guarantees (2020) Downloads
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