Correlation Analysis Of Export Credit Insurance And Export Trade

Export credit insurance provides companies with coverage for outstanding receivables, protecting against risk of protracted default of insolvency of the buyer. And this study tries t o find impacts of export insurance systems on the exports in Korea and China. According to the theoretical analysis of Funastu, when export credit insurance is available, an insured risk adverse firm exports more than no insurance available.Firstly, this study supposes that there is a correlation between the trade competitiveness indexes (RCA and TSC) on the machinery & electronics industries and insurance premium volume. The results of the test show that there are few Granger causal relationships between indexes and Export insurance premium, But the results between export volume and export credit insurance have relationships and those are not always directly trigger the real export volume in Korea and China, but may have a long-term effect on the export in a roundabout way.Secondly, using the OLS regression analysis it analyzed the effects of export insurance systems upon the exports in Korea and China. the period of data is from 1990 to 2011. The result of the regression analysis for export insurance showed that significant and positive effects of both Korean and China upon the exports. It can also prove the Funastu analysis.Finally, through the conclusion derived from the empirical study, this paper proposed some advices or the further development of the Korean and China's Export credit insurance policy.