Drivers of trade finance gaps

Arbeitspapier

Banks are a critical facilitator of trade. Without bank-intermediated trade finance, global exports and imports would come to a halt. This has been apparent during the episodes of credit rationing that accompany financial shocks. But we have little insight into the drivers of rejection pooling by banks in normal times. Using augmented data from a global survey of financial institutions, we test the relative explanatory power of country- and bank-level characteristics as drivers of trade finance rejections in emerging markets and among small and medium-sized enterprises. The analysis suggests that rejections are driven by three broad factors: those inherent to the trade finance transaction including risk and income, those which indicate a redirection of bank's business lines, such as termination of correspondent relationships, and implementation of improved client screening mechanisms. Together, these suggest that solutions to trade finance gaps are most likely to be found outside of the traditional toolbox.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ADBI Working Paper ; No. 678

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; International Lending and Debt Problems ; International Linkages to Development; Role of International Organizations ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Subject: Economics

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): DiCaprio, Alisa ; Yao, Ying
• Event: Veröffentlichung
• (who): Asian Development Bank Institute (ADBI)
• (where): Tokyo
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/163177
• Last update: 10.03.2025, 11:44 AM CET