Effect of Export Credit Insurance on Export Performance: An Empirical Analysis of Korea

Abstract

This study examines whether export credit insurance contributes to an increase in exports and investigates the channel through which export credit insurance affects exports. We use detailed Korean short-term export credit insurance data provided by K-SURE and conduct a regression with an extensive set of dummy variables using the Poisson pseudo-maximum-likelihood estimator. Our regression result shows that short-term export credit insurance increases exports by mitigating the financial constraints of exporting firms. Furthermore, the export-enhancing role of short-term export credit insurance is more significant when the destination country is a developing country or when the exporting companies are small.