Ratio Working Paper No. 316: Mitigating Information Frictions in Trade: Evidence from Export Credit Guarantees

Information frictions make non-simultaneous exchange risky, particularly across borders. Therefore, many countries insure cross-border exchange. We investigate the effects on firm trade, jobs, value added and productivity, using uniquely detailed, comprehensive and longitudinal transaction-level Swedish data on insurance and granular data on exporters and foreign buyers. For identification, we employ matching and differencein- difference and fuzzy regression discontinuity estimators and exploit a quasi-natural experiment. We find strikingly heterogeneous effects across firm size and response variables. The strongest positive effects are for small traders and new users. Overall, the evidence suggests a causal link from export insurance to firm performance.

Lodefalk, M., Tang, A. & Wang, Z. (2018). Mitigating Information Frictions in Trade: Evidence from Export Credit Guarantees. (Ratio Working Paper No. 316)