Credit Access and Market Access: Evidence From a Portuguese Credit Guarantee Scheme

72 Pages Posted: 2 May 2024 Last revised: 7 Jun 2024

See all articles by Claudia Custodio

Claudia Custodio

Imperial College London; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Chris Hansman

Imperial College London

Bernardo Mendes

London Business School

Date Written: May 2, 2024

Abstract

We show that credit access is a key barrier to exporting. We analyze a government scheme that provided credit guarantees to Portuguese SMEs. Regression discontinuity estimates, based on program eligibility criteria, indicate that qualifying firms are more likely to export and to expand their export activity. Credit access has persistent effects, disproportionately impacting not-yet exporters and smaller firms. Our results support international trade models in which credit allows firms to overcome sunk entry costs, leading to hysteresis in trade. We propose two sources of these costs-trust-building and quality upgrading-and show that government guarantees promote access to foreign markets.

Keywords: Exports, Trade, Small Firms' Financing, Credit Guarantee Schemes JEL Classification: F10, F14, G28

JEL Classification: F10, F14, G28

Suggested Citation

Custodio, Claudia and Hansman, Chris and Mendes, Bernardo, Credit Access and Market Access: Evidence From a Portuguese Credit Guarantee Scheme (May 2, 2024). Available at SSRN: https://ssrn.com/abstract=4814865 or http://dx.doi.org/10.2139/ssrn.4814865

Claudia Custodio

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Chris Hansman

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Bernardo Mendes (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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