Export Credit and Its Impact on The value of ‎Exports

  • Authors

    • G Narayana Swamy Research Scholar, VIT Business School, ‎Vellore Institute of Technology, Chennai, Tamil Nadu, India
    • Shaik Saleem Assistant Professor, VIT Business School, ‎Vellore Institute of Technology, Chennai, Tamil Nadu, India
    https://doi.org/10.14419/sms0zs30

    Received date: July 25, 2025

    Accepted date: September 30, 2025

    Published date: October 15, 2025

  • ARDL Model; Exchange Rate; Export Credit; Export Performance; Inflation

  • Abstract

    Exports play a pivotal role in India’s international trade and overall GDP growth. As export ‎credit is classified under the priority sector, scheduled commercial banks consistently extend ‎credit to the export sector, leading to a steady annual increase in outstanding export credit. ‎This study investigates the extent to which export credit contributes to the value of exports in ‎international trade. Using monthly data on export credit and export value from April 2008 to ‎March 2025, the analysis employs Autoregressive Distributed Lag (ARDL) short-run and long-run models to assess the relationship. The findings demonstrate that export credit is an ‎essential factor of export value, with a stronger influence in the long run than in the short run. ‎Additionally, export performance is positively affected by inflation and negatively impacted ‎by the exchange rate. The findings suggest that further enhancement of commercial banks’ ‎export credit under the priority sector is essential to strengthen India’s international trade ‎balance‎.

  • References

    1. Agrawal, P. (2014). The role of exports in India’s economic growth. The Journal of International Trade & Economic Development, 24(6), 835–859. https://doi.org/10.1080/09638199.2014.968192.
    2. Bandopadhyay, K., & Tagar, L. K. (2020). Factors of export promotion of MSME in India with special reference to raw material availability. SEDME (Small Enterprises Development, Management & Extension Journal), 47(1), 17–32. https://doi.org/10.1177/0970846420930446.
    3. Balassa, B. (1985). Exports, policy choices, and economic growth in developing countries after the 1973 oil shock. Journal of Development Eco-nomics, 18(1), 23–35. https://doi.org/10.1016/0304-3878(85)90004-5.
    4. Berger, A. N., & Udell, G. F. (1992). Some evidence on the empirical significance of credit rationing. Journal of Political Economy, 100(5), 1047–1077. Retrieved from https://EconPapers.repec.org/RePEc:ucp:jpolec:v:100:y:1992:i:5:p:1047-77https://doi.org/10.1086/261851.
    5. Mutharika, B. W. (1976). Export credit financing as a development policy: A pragmatic view of the special problems faced by exporters in the de-veloping world. IMF Staff Papers, 23(1), 29–33. https://doi.org/10.2307/2297430.
    6. Dhinakaran, P. D., & Kesavan, N. (2020). Exports and imports stagnation in India during COVID-19: A review. GIS Business, 15(4), 1158–1177. Retrieved from https://gisbusiness.org/index.php/gis/article/view/19913/14736.
    7. Diamond, D. W. (1984). Financial intermediation and delegated monitoring. The Review of Economic Studies, 51(3), 393–414. https://doi.org/10.5958/2230-732X.2016.00079.6.
    8. Nkoro, E., & Uko, A. K. (2016). Autoregressive distributed lag (ARDL) cointegration technique: Application and interpretation. Journal of Statisti-cal and Econometric Methods, 5(4), 63–91. Retrieved from https://www.scienpress.com/Upload/JSEM/Vol%205_4_3.pdf.
    9. Gururaj, B., & Satish Kumar, M. (2016). Analysis of factors affecting the performance of exports in India. International Journal of Agriculture, En-vironment and Biotechnology, 9(4), 613–616. https://doi.org/10.5958/2230-732X.2016.00079.6.
    10. Behera, H., & Wahi, G. (2018). How have MSME sector credit and exports fared? Mint Street Memo No. 13. Reserve Bank of India. Retrieved from https://rbi.org.in/Scripts/MSM_Mintstreetmemos13.aspx.
    11. Heckscher, E. F., Ohlin, B. G., & Flanders, M. J. (1991). Heckscher-Ohlin trade theory. MIT Press. Retrieved from https://api.semanticscholar.org/CorpusID:48668522.
    12. Bhagwati, J. N. (1978). Anatomy of exchange control regimes. In Foreign Trade Regimes and Economic Development: Anatomy and Consequenc-es of Exchange Control Regimes (pp. 7–52). NBER. Retrieved from http://www.nber.org/chapters/c1019.
    13. Kapoor, M., Jha, P., & Raychaudhuri, J. (2022). The impact of credit constraints on exporting firms: Empirical evidence from India. SSRN Electron-ic Journal, 1–32. https://doi.org/10.2139/ssrn.2023068.
    14. Krugman, P. R., & Obstfeld, M. (2009). International Economics: Theory and Policy (8th ed.). Pearson Education.
    15. Kadiwala, K. A. (2017). A study on priority sector lending by public sector banks and private sector banks in India. International Journal of Re-search in All Subjects in Multi Languages, 5(2), 67–71. Retrieved from https://www.raijmr.com/ijrsml/wp-content/uploads/2019/10/IJRSML_2017_vol05_sp.issue_2_Eng_15.pdf.
    16. Pigou, A. C. (1936). Mr. J. M. Keynes’ General Theory of Employment, Interest and Money. Economica, 3(10), 115–132. https://doi.org/10.2307/2549064.
    17. Rahaman, S. M., & Mondal, S. (2023). Impact of priority sector lending on the Indian commercial banks’ financial performance. In Advancements in Commerce, Economics & Management: A Research Compilation (pp. 91–98). Orange Books.
    18. Rajan, R. G., & Zingales, L. (1998). Financial dependence and growth. American Economic Review, 88(3), 559–586. Retrieved from http://www.jstor.org/stable/116849.
    19. Selvi, D. (2014). Lending to priority sector: A scenario from Indian scheduled commercial banks. EPRA International Journal of Economic and Business Review, 2(7), 44–49. Retrieved from https://eprajournals.com/IJES/article/9353.
    20. Patil, S., & Chavan, R. R. (2020). Analysis on export performance: MSMEs in India. Journal of Architecture & Technology, 8(1), 156–161. Re-trieved from https://www.researchgate.net/publication/352106440_ANALYSIS_ON_EXPORT_PERFORMANCE_MSMEs_IN_INDIA.
    21. Sharma, K. (2000). Export growth in India: Has FDI played a role? Center Discussion Paper No. 28372. Economic Growth Center, Yale Universi-ty.
    22. Sharma, K. (2003). Factors determining India’s export performance. Journal of Asian Economics, 14(3), 435–446. https://doi.org/10.1016/S1049-0078(03)00036-8.
    23. Shrestha, M. B., & Bhatta, G. R. (2018). Selecting appropriate methodological framework for time series data analysis. The Journal of Finance and Data Science, 4(2), 71–89. https://doi.org/10.1016/j.jfds.2017.11.001.
    24. Stiglitz, J. E., & Weiss, A. (1981). Credit rationing in markets with imperfect information. American Economic Review, 71(3), 393–410. Retrieved from http://www.jstor.org/stable/1802787.
    25. Jha, S. (2024). Role of domestic credit vis-à-vis foreign credit on BRICS countries’ GDP and export growth. In Convergence and Developmental Aspects of Credit Allocations in BRICS Nations (pp. 100–118). Routledge. https://doi.org/10.4324/9781003320029-9.
    26. Suresh, N. (2015). Impact of export credit on the exports of MSMEs: A study of Ranga Reddy District. Asian Journal of Research in Banking and Finance, 5(12), 1–12. https://doi.org/10.5958/2249-7323.2015.00148.0.
    27. Yogeshwar, B. (2022). Credit constraints, bank incentives, and firm export: Evidence from India. Centre for Advanced Financial Research & Learning (CAFRAL).
    28. Retrieved from https://www.cafral.org.in/sfControl/content/Speech/122202245420AMYB_Credit_Constraint_Bank_Incentives_and_Export_Firm.pdf.
    29. Adjei, J. K., & Oppong, M. (2025). Financial intermediation and economic growth in Sub-Saharan Africa: Evidence from panel data analysis. Jour-nal of Economic Policy and Finance, 14(1), 45–62.
    30. Dasgupta, R., & Mehta, S. (2023). Trade finance and the survival of small exporters in emerging markets. World Development, 165, Article 106215. https://doi.org/10.1016/j.worlddev.2023.106215.
    31. Kumar, A., & Rani, P. (2021). Financial development and export performance in emerging markets. Journal of International Trade & Economic De-velopment, 30(8), 1167–1184.
    32. Sudipta, S. (2024). Domestic and foreign credit in BRICS economies: A time-series approach. Economic Modelling, 125, Article 106312.
    33. GTR. (2023). Export credit agencies: Rising support amid global uncertainty. Global Trade Review. Retrieved from https://www.gtreview.com.
    34. Hur, J., & Yoon, H. (2022). The effect of public export credit supports on firm performance. Bristol Economics Discussion Paper, 22/760, 1–27. University of Bristol. Retrieved from https://www.bristol.ac.uk/efm/media/workingpapers/working_papers/pdffiles/dp22760.pdf.
    35. Oramah, B., & Dzene, R. (2025). Export credit arrangements in capital-scarce developing countries. Springer. https://doi.org/10.1007/978-3-658-45368-8. https://doi.org/10.1007/978-3-658-45368-8.
    36. Ninsin, R., & Addo, S. (2025). Trade credit insurance and firms’ resilience: Evidence from emerging economies. International Journal of Trade and Finance, 16(2), 101–115.

  • Downloads

  • How to Cite

    Swamy, G. N. ., & Saleem , S. . (2025). Export Credit and Its Impact on The value of ‎Exports. International Journal of Accounting and Economics Studies, 12(6), 595-602. https://doi.org/10.14419/sms0zs30