Publication: Access to Preshipment Export Finance : Do Guarantees Help?
Date
2007-04
ISSN
Published
2007-04
Author(s)
Alavi, Hamid
Abstract
Many small- and medium-sized emerging
exporters in developing countries have inadequate access to
short-term working capital to finance their export
transactions. This is mainly due to a market failure
resulting from informational asymmetries on the part of
banks about exporters' ability to execute export orders
according to buyers' standards of quality, cost, and
delivery. Several countries have established pre-shipment
export finance guaranty facilities to help alleviate this
market failure. Their aim is to act as catalyst to
temporarily share nonperformance risks of exporters with the
banks, allowing the banks to evaluate nonperformance risks
of emerging exporters. Some countries have implemented these
facilities successfully encouraging banks to provide
pre-shipment finance without guarantees, while others have
not. This note draws on Tunisia's experience to outline
the necessary conditions for the success of these facilities.
Citation
“Alavi, Hamid. 2007. Access to Preshipment Export Finance : Do Guarantees Help?. PREM Notes; No. 113. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/1b9320fa-673b-508e-9abc-ef46b3083f46 License: CC BY 3.0 IGO.”