Abstract: This paper discusses the characteristics of trade finance and the various finance institutions and instruments including: bank credit; company credit; bank loans; and self-financing. It reviews the microeconomics and development strategy of trade financing, including trade transactions and payment methods. It shows that the most important difference between the typical developing country system and modern system is the ability and willingness of modern systems to assure access to trade financing for all traders with confirmed trade orders. Many developing economies cannot provide such assurances because they have not yet developed trade financing disbursement and liquidation mechanisms that eliminate or reduce risks of loan misuse and because they do not yet use preshipment export finance guarantees and export credit insurance/guarantees. The paper also discusses the two types of risk which influence access to trade financing: nonperformance by exporters and nonpayment by overseas buyers.
Publication Year: 1989
Publication Date: 1989-09-30
Language: en
Type: book
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Cited By Count: 4
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