Do subsidised export loans increase exports?

Abstract

Turkey's export rediscount credit programme provides credit to exporting firms that is both easy to acquire and is offered at a low interest rate. We follow the performance of firms that first received the credit in 2012 when the amount of credit provided went up dramatically in 2012. We use propensity score matching to construct a control group of firms with which we compare the credit‐receiving firms before and after 2012 in a difference‐in‐differences framework. These firms have increased their exports substantially in the following years compared to the matched firms with similar propensities to receive the rediscount credit. We find that firms that received the rediscount credit increased their exports by 65% and total sales by 19% compared to matched firms. We find no statistically significant effects on domestic sales and profits. We also find suggestive evidence that the effects are larger for smaller firms and the effects fade away after a certain amount of credits.

Evaluating the Impact of Export Finance Support on Firm-Level Export Performance: Evidence from Pakistan

“…Our results are consistent with the findings of Akgündüz et al (2018), who find that the subsidized loan program they evaluate in Turkey increases the average growth rate of exports of treated firms by approximately 10 percentage points over the course of 5 years-a very similar magnitude to the one we estimate. Our results contrast with the majority of paper evaluating different instruments of export promotion in developing countries (Volpe Martincus and Carballo, 2008;Cadot et al, 2015;Defever et al, 2020, e.g.…”

Evaluating the Impact of Export Finance Support on Firm-Level Export Performance: Evidence from Pakistan

“…Our results are consistent with the findings of Akgündüz et al (2018), who find that the subsidized loan program they evaluate in Turkey increases the average growth rate of exports of treated firms by approximately 10 percentage points over the course of 5 years-a very similar magnitude to the one we estimate. Our results contrast with the majority of paper evaluating different instruments of export promotion in developing countries (Volpe Martincus and Carballo, 2008;Cadot et al, 2015;Defever et al, 2020, e.g.…”

“…The two papers that are most closely related to ours are Zia (2008) and Akgündüz et al (2018). Zia (2008) takes advantage of the unexpected inclusion of cotton yarn exporters in the negative list for EFS in 2000 to investigate the impact that the removal of subsidized credit has on exports and the balance sheet of affected firms.…”

“…Since approximately half of loans are assigned to large firms, EFS generates the misallocation of credit by providing subsidized credit to financially unconstrained firms. Akgündüz et al (2018) evaluate the effect of a program of subsidized loans to exporters that is very similar to EFS on firm-level sales, exports and employment of Turkish exporters. Our work complements these papers in two key respects: first, we not only evaluate the impact of short maturity subsidized loans to working capital, but we also assess the impact of a policy that targets long-term investment in physical capital as LTFF does.…”

Asymmetric Effect of Oil Prices on Export Performance: The Role of Export Financing Schemes in Pakistan

“…The symmetric impact of oil prices on Pakistan's total exports has also been examined. Akgündüz et al (2018) investigated that do subsidized loans increased exports. A study mentioned that Turkey's central bank is giving a subsidized loan to its exporters, so the study was Source: Gillani Research foundation conducted to check the performance of those firms which are getting benefits from such a rediscount credit policy.…”