²»Á¼Ñо¿Ëù

Adrien Matray

Harvard University

EXIM’s Exit: The Real Effects of Trade Financing by Export Credit Agencies

Date: Friday, February 28, 2025
Time: 10:30-11:45 am
Location: Bronfman Bldg. (1001 Sherbrooke St. West), Room 301

All are cordially invited to attend.

Abstract:

We study 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. We show that a $1 reduction in EXIM trade financing reduces exports in an industry by approximately $4.5. The impact on firms’ total revenues implies that the export shock has positive pass-through to domestic sales, and firms contract investment and employment. We document that EXIM trade financing helps to overcome two key constraints: firms’ financing constraints and contractual frictions in importer markets, indicating that even in well-developed financial markets, trade financing is plausibly undersupplied by private banks. Consistent with this evidence of efficiency gains, we find that EXIM reduced capital misallocation, with higher ex-ante marginal revenue product of capital firms expanding more. These results provide a framework for the conditions under which Export Credit Agencies can boost exports and firm growth, and can act as a tool of industrial policy without necessarily leading to a misallocation of resources.