Credit Access and Market Access: Evidence From a Portuguese Credit Guarantee Scheme
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Series
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Speaker(s)Claudia Custodio (Imperial College London, United Kingdom)
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FieldFinance, Accounting and Finance
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LocationTinbergen Institute Amsterdam, room 1.01
Amsterdam -
Date and time
June 05, 2024
12:45 - 14:00
Abstract
We show that credit access is a key barrier to exporting. We analyze a government scheme that provided credit guarantees to Portuguese SMEs. Regression discontinuity estimates, based on program eligibility criteria, indicate that qualifying firms are more likely to export and to expand their export activity. Credit access has persistent effects, disproportionately impacting not-yet exporters and smaller firms. Our results support international trade models in which credit allows firms to overcome sunk entry costs, leading to hysteresis in trade. We propose two sources of these costs — trust-building and quality upgrading — and show that government guarantees promote access to foreign markets. Joint paper with Christopher Hansman.