DISTINCTIVE PAY-OFF OF PACKING CREDIT AND BANK LOAN FOR INDIAN EXPORTERS: A NONLINEAR APPROACH

Paper Number :WP/08/2021
Publication Date :Dec. 19, 2021

In the framework of uneven access in bank finances, our study empirically examines the asymmetrical contribution of the large and small exporters in India’s export growth. By using panel threshold model developed by Hansen, 1999 we examine the impact of packing credit and other available sources of bank finances utilized by large and small exporters during 2002-03 through 2018-19. Our major findings are (a) packing credit, short term bank loans are effective to induce export growth of India, however, packing credit is more conducive, especially for small exporters; and (b) reduction in lending cost through interest subvention has significant positive effect on export. The important policy recommendations of our study are (i) differentiated interest rate favoring the small exporters may boost India’s export even further; and (ii) to reap the benefit of government induced interest subvention more emphasize to be given for the small exporters.