Evaluating the Impact of Export Finance Support on Firm-Level Export Performance: Evidence from Pakistan

32 Pages Posted: 28 Aug 2020

See all articles by Fabrice Defever

Fabrice Defever

City University London

Alejandro Riaño

affiliation not provided to SSRN

Gonzalo Varela

World Bank

Date Written: 2020

Abstract

This paper evaluates the impact of two export finance support schemes: The Export Finance Scheme (EFS) and the Long-Term Finance Facility for Plant & Machinery (LTFF) on firm-level export performance. These policies offer loans to exporters at concessionary interest rates to finance short-term working capital and long-term investment in machinery and equipment respectively. To do so, we combine customs data with information about which firms participate in each scheme and the value of the loans they obtain between 2015 and 2017. We find that EFS and LTFF increased the growth rate of exports sales by 7 and 8-11 percentage points respectively. Neither policy exerts a significant impact on the number of products that a firm exports or the number of foreign countries it sells to. Our analysis indicates that facilitating long-term investment in physical capital is more cost effective to raise exports than subsidizing exporters’ working capital needs.

Keywords: trade finance, export credit, export subsidies, export margins, Pakistan

JEL Classification: G210, G280, G320, F130, F650

Suggested Citation

Defever, Fabrice and Riaño, Alejandro and Varela, Gonzalo, Evaluating the Impact of Export Finance Support on Firm-Level Export Performance: Evidence from Pakistan (2020). CESifo Working Paper No. 8519, Available at SSRN: https://ssrn.com/abstract=3682019 or http://dx.doi.org/10.2139/ssrn.3682019

Fabrice Defever (Contact Author)

City University London ( email )

Northampton Square
London, EC1V OHB
United Kingdom

Alejandro Riaño

affiliation not provided to SSRN

No Address Available

Gonzalo Varela

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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