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Evaluating the impact of export finance support on firm-level export performance: evidence from Pakistan

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  • Defever, Fabrice
  • Riaño, Alejandro
  • Varela, Gonzalo

Abstract

This paper evaluates the impact of two large export finance support schemes on firm-level export performance. The Export Finance Scheme (EFS) and the Long-Term Finance Facility for Plant & Machinery (LTFF), provide loans at subsidized interest rates for Pakistani exporters to finance working capital and the purchase of machinery and equipment respectively. We combine customs data with information on firms' participation in each program between 2015 and 2017 and use matching combined with difference-in-differences to estimate the effect of the subsidies on firms' export values, the number of products exported and the number of destinations they serve. We find that both programs deliver a large and positive impact on export growth rates - primarily along the intensive margin - and do so in an effective way relative to the direct financial cost of the subsidies.

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  • Defever, Fabrice & Riaño, Alejandro & Varela, Gonzalo, 2024. "Evaluating the impact of export finance support on firm-level export performance: evidence from Pakistan," LSE Research Online Documents on Economics 126843, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:126843
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    2. Uzma Zia & Fozia Tabussom, 2023. "Impact of Export Financing Schemes on Export Performance Qualitative Approach," PIDE-Working Papers 2023:13, Pakistan Institute of Development Economics.
    3. Ghulam Mustafa & Saqib Hussain, 2023. "What are the Factors Making Pakistan’s Exports Stagnant? Insight from Literature Review," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 62(3), pages 449-460.
    4. Arby, Muhammad Farooq & Younus, Sayera & Tobgye, Sonam & Dema, Phurpa & Das, Praggya & Shafwath, Aminath & Bhatta, Siddha Raj & Raza, Bilal & Perera, W.S Navin, 2021. "The use of Unconventional Monetary Policy Instruments by South Asian Central Banks," MPRA Paper 119287, University Library of Munich, Germany, revised 01 Apr 2023.
    5. Femi-Olagundoye Mercy, 2024. "Exchange Rate Management and Sectorial Export-Financing in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(8), pages 4332-4350, August.

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    More about this item

    Keywords

    trade finance; export subsidies; working capital; machinery and equipment; export margins; Pakistan;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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