The Evidence and Impact of Financial Globalization

Chapter 13

Role of Trade Finance

I. Love*,^†

^*University of Hawaii at Manoa, Honolulu, HI, USA

^†The World Bank, Washington, DC, USA

Outline

Introduction

What is Trade Finance?

Risks Inherent in International Trade

Existing Evidence on Trade Finance Patterns Around the World

New Evidence on Trade Finance Patterns Around the World

Theories of Trade Credit and Trade Finance

Relationship Between Bank Credit and Trade Credit

Trade Credit Versus Bank Credit during the Financial Crisis

Trade Finance Behavior during the Most Recent Global Financial Crisis

Role for Policy Interventions to Support Trade Finance During the Crises

Conclusion

Glossary

References

By providing critical fluidity and security to enable the movement of goods and services, trade ...