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.