Date: 21 March 2024 (Thu)
Webinar
Webinar Series:
Capital Marketing Development: China and Asia
EXIM’s Exit: The Real Effects of Trade Financing by Export Credit Agencies
21 March 2024, Thursday
10:00 am – 11:10 am, Thursday (Singapore Time, UTC+8)
[EXIM’s Exit: The Real Effects of Trade Financing by Export Credit Agencies]
This paper studies the role of export credit agencies—the predominant tool of industrial policy—on firm behavior by using the effective shutdown of the Export-Import Bank of the United States (EXIM) from 2015-2019 as a natural experiment. The paper shows that firms that previously relied on EXIM support saw a 18% drop in global sales after the agency closed down, driven by a reduction in exports. Firms affected by the shutdown were unable to make up for the loss of trade financing, especially if they were financially constrained, and consequently laid off employees and curtailed investment. These negative effects were more pronounced for firms with higher export opportunities and higher ex-ante marginal revenue products of capital. Lower exports at the firm level aggregate up to lower total exports for industries most reliant on EXIM support. These findings suggest that government policies aimed at providing trade financing can boost exports and firm growth even in countries with well-developed financial markets without necessarily leading to a misallocation of resources.
Speaker:
Poorya KABIR, Assistant Professor of Finance, NUS Business School, National University of Singapore
Co-authors:
Adrien MATRAY, Visiting Assistant Professor of Finance, Graduate School of Business, Stanford University
Karsten MULLER, Assistant Professor of Finance, NUS Business School, National University of Singapore
Chenzi XU, Assistant Professor of Finance, Graduate School of Business, Stanford University
Discussant:
Réka JUHASZ, Assistant Professor of Economics, Vancouver School of Economics, University of British Columbia
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Event Website
https://abfer.org/events/abfer-events/webinar-series/378:webinarseries-cmd-33
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About the Webinar
Financial market development goes hand-in-hand with economic growth. The development of China's capital markets in terms of size, regulations, capability, and efficiency has been impressive. China may now even lead globally in some dimensions, notably e-payments systems. Yet, China's capital markets are still a work-in-progress facing both generic and unique challenges. Other Asian capital markets have even greater uneven development. Some in advanced Asian economies have acquired globally acclaimed reputation and capabilities while various regulatory and structural weaknesses dwarf others. Corporations and investors have been inclined to arbitrage cross-border regulatory and developmental gaps; so the very uneven status of capital markets across Asia is a policy issue for the governments in the entire region and perhaps globally. Analysing the positive and negative lessons in the functioning of Asia's capital markets, and identifying reforms and applications of technology that could further improve Asian capital markets' allocation efficiency, financial inclusion, and forewarning against reforms that might cause problems can benefit practitioners, policymakers and researchers, and can contribute significantly to overall prosperity.
The ABFER and the University of Chicago's Becker Friedman Institute China (BFI-China), in collaboration with National University of Singapore (NUS) Business School, Shanghai Advanced Institute of Finance (SAIF), The Chinese University of Hong Kong (CUHK) Department of Economics, CUHK-Shenzhen and Tsinghua University PBC School of Finance (Tsinghua PBCSF), hope to provide a virtual network to benefit researchers, policymakers, and practitioners from Asia and beyond.