Other Publications

Dhaman produces a set of publications that include working papers, research, translations and briefings, focusing on the corporation’s activities through deep analyses by producing specialized research papers and monitoring world developments, conferences, events, publications and reports related to investment, export and risk insurance, based on translations, briefings and various research contributions

Abstract

Author

Riadh Ben Jelili

WP/01/2020: Dhaman WP 2020-01

WP/2020/01: Do Default Loss Risks Matter for Arab Exports? Evidence from a Gravity Modelling Approach

Abstract: In the literature, it has been common to use credit risk scores to investigate impacts of external sources of risk and political institutions on foreign investment location choice-decisions. However, only a few studies have specifically examined the relationship between importing country’s credit risk scores and exports. Side stepping the limited availability of statistics on ECAs activities in the Arab countries, this paper investigates empirically the relationship between merchandise exports and credit scores of importing countries. Based on a gravity equation augmented with the risks of default on international payments, measured by intra-country risk ratings, the principal contribution of the present research is to scrutinize the impact of commercial and political risks on merchandise trade in the Arab region. The findings suggest that in the absence of insurance contracts against the risk of defaulting payments, firms are more likely to export to countries with higher prior probabilities to secure payments. It logically follows that provisions of export credit guarantees well targeted towards reducing buyer risks are likely to boost-up exports.