Latest Trends in Financing by Export Credit Agencies (ECAs)

Abstract

Export Credit Agencies (ECAs) play a very important role in world trade especially when the new markets are risky; political risks are involved; the amount involved is very high and also the payment would take a long time to come, e.g. in project exports. These are some of the factors which inhibit the private insurers to insure or provide credit to the exporters. With the financial crisis in 2008, there was a liquidity crunch and that led to a greater void on part of private insurers. Before the financial crisis, it was thought that ECAs have no future and are slowly moving towards its demise. But it was not to be so! The main objective of this paper is to find out the latest developments related to ECAs. This paper also talks about- what constitutes an ECA? How do we define an ECA? What are the rationales behind establishing an ECA? What are the objectives of ECAs? Paper further talks about the institutional forms and the various kinds of ECAs The findings can be summed up as that there is increased demand for its products after the financial crisis. ECAs have also responded well to this increased demand not only by catering to this increased demand but also by bringing more innovative products. Asian ECAs are financing the projects in a big way. Some countries are planning to establish Export Import Banks. There is greater bilateral and regional cooperation between ECAs, Export Import Banks and Development Financial Institutions. There is also greater cooperation between ECAs and the Multilateral Banks, Private Institutions. ECAs are also looking at Islamic Business growth as this is going to be big business in near future. With increased business between South-South, there is greater cooperation between the ECAs in these countries. As this is a secondary research, it is not possible to check the veracity of the points mentioned by other researchers or mentioned in various studies. The study is also limited by the little data available about the ECAs.

Keywords: Export Credit Agencies (ECAs), Export Finance, Export Credit Insurance, Role of Export Credit Agencies, Importance of Export Credit Agencies, Developments Related to Export Credit Agencies

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