A Study on the Impact of the Export-Import Bank of Korea's Official Export Finance Support on Exports

Purpose – The purpose of this study is to analyze the impact of official export finance supported by the Export-Import Bank of Korea on Korea's exports. In particular, in order to differentiate from previous studies, the detailed size, as well as the long-term and short-term effects of export financing support on exports, were analyzed. Design/Methodology/Approach – In this analysis, an Export Demand Function Model was introduced. Prior to the empirical analysis, a unit root test and cointegration test were conducted. As a result of the pretest, it was found that the variables included in the analysis were I (1), and the cointegration vector did not exist. Based on these results, a Vector Autoregressive (VAR) model was established. Findings – As a result of estimating the impulse response function, it was found that when an official export finance shock was applied, exports gradually increased from the time of the shock to the third period, and then the increase slowed and converged to zero. As a result of the variance decomposition analysis, the export financing support amount began to show explanatory power in export fluctuations from the second period, and showed about 2.5% explanatory power from the third to the tenth period. Research Implications – It was confirmed that export finance provided to exporting companies plays an important role in helping to promote exports. Therefore, the government and financial institutions should support exporting companies by providing active export financing support, along with export promotion policies.