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

This paper evaluates the impact of two export finance support schemes, the Export Finance Scheme and the Long-Term Finance Facility for Plant & Machinery on firm-level export performance in Pakistan. These policies offer loans to exporters at concessionary interest rates to finance short-term working capital and long-term investment in machinery and equipment, respectively. The paper combines customs data with information on firms that participated in each scheme and the value of the loans they obtained between 2015 and 2017. Using matching estimators to control for the nonrandom selection of firms into the schemes, the analysis finds that the Export Finance Scheme and Long-Term Finance Facility for Plant & Machinery increased the growth rate of export sales by 7 and 8-11 percentage points, but they do not have a significant impact on the number of products that a firm exports or the number of foreign countries to which it sells to. A cost-benefit analysis shows that although both schemes deliver net benefits, they entail a substantial financial cost to Pakistan's central bank.

Details

  • Author

    Defever,Fabrice Fernand, Riano,Alejandro, Varela,Gonzalo J.

  • Document Date

    2020/08/13

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS9362

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Pakistan,

  • Region

    South Asia,

  • Disclosure Date

    2020/08/13

  • Disclosure Status

    Disclosed

  • Doc Name

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

  • Keywords

    trade and investment; negative real interest rate; export performance; corporate income tax rate; small and medium enterprise; machinery and equipment; value of exports; propensity score matching; export credit guarantee; treasury bill rate; export promotion policy; special economic zone; allocation of credit; export promotion program; providers of credit; predictor participation; Letter of Credit; supply of credit; software and services; fruit and vegetable; cost of goods; impact of credit; international trade transaction; increase tax revenue; statutory tax rate; export promotion agency; access to loan; delivery of good; country of origin; export performance requirements; lower interest rate; share of export; commercial bank; working capital; opportunity cost; export value; products export; foreign exchange; export sector; subsidized credit; counterfactual outcome; export transaction; foreign market; empirical analysis; standard error; random selection; customs datum; maximum maturity; financial cost; external fund; export product; value product; positive impact; high share; import good; export finance; long-term investment; export business; borrowing rate; foreign buyer; interest income; support policy; private bank; tax incentive; export proceeds; raw material; cash subsidy; capital stock; cotton yarn; short maturity; Estimate Taxes; substantial variation; raw data; 0 hypothesis; sample mean; export schemes; aggregate exports; export basket; foreign destinations; loan program; estimated tax; estimation method; increasing exports; production process; export market; global demand; technology upgrading; liquidity need; high tax; new market; textile waste; manufacturing sector; long-term loan; single loan; summary statistic; rice processing; leather products; surgical instrument; engineering good; electrical generator; duty drawback; Soda Ash; primary product; import transaction; pakistani rupee; textile sectors; low share; destination country; fundamental problem; government support; clearing customs; international market; Research Support; outstanding loan; adjustment cost; real depreciation; credit constraint; fostering exports; export subsidy; development policy; open access; concessionary loan; guarantee program; cost-benefit analysis; foreign country; research assistance; capital need; policy program; apparel sector; export subsidies

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Citation

Defever,Fabrice Fernand Riano,Alejandro Varela,Gonzalo J.

Evaluating the Impact of Export Finance Support on Firm-Level Export Performance : Evidence from Pakistan (English). Policy Research working paper,no. WPS 9362 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/580181597344115826/Evaluating-the-Impact-of-Export-Finance-Support-on-Firm-Level-Export-Performance-Evidence-from-Pakistan