Do Export Credit Agencies Benefit the Economy?

This study empirically evaluates the effectiveness of Export Credit Agencies (ECAs) on export and other key macroeconomic variables such as real GDP growth, employment, and domestic lending activities. Based on a panel data of 15 countries, which have established the official ECAs during 1972-2010, we use the differences-in-differences method for estimation by utilizing the staggering timing of ECA establishments in those countries. We find that: (1) having an ECA raises export, (2) this positive effect does not last in the long run, (3) this positive effect comes from direct export credit scheme, not from credit guarantee scheme, (4) ECA credit crowds out private lending in domestic financial markets, and (5) having an ECA is not associated with higher economic growth and employment