Why does finance matter for trade? Evidence from new data

Marc Auboin, Martina Engemann 03 December 2012

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Academic interest in the role of trade finance has grown in the context of the financial crisis of 2008-09 and the subsequent economic downturn, just as policymakers’ interest was once caught by the Asian financial crisis (IMF 2003).

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Topics:  International trade

Tags:  trade, international trade, financial crisis, Trade finance, Great Recession, trade credit, trade insurance

International trade finance practices

Pol Antràs, C Fritz Foley 29 July 2011

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During the recent economic crisis, several practitioners claimed that financial constraints contributed to the large decline in global trade flows relative to gross domestic product. Some evidence collected in a survey conducted by the International Chamber of Commerce and in a survey conducted by the IMF and the Banker’s Association for Finance and Trade supported their claims. Policymakers responded with a variety of measures to increase the available of capital for importers and exporters.

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Topics:  International trade

Tags:  Trade finance, great trade collapse, poultry

The G20 mandate on fixing trade finance for low-income nations

Marc Auboin 25 November 2010

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Over the last year, a number of papers and studies have highlighted the impact of the global crisis on the availability of trade finance in global markets, and its spill-over effect on trade (Weinstein and Amiti 2009, Baldwin 2009).

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Topics:  Global crisis International trade

Tags:  WTO, G20, Trade finance

The prudential treatment of trade finance under Basel III: For a fair treatment

Marc Auboin 07 March 2010

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There was a time when trade finance received favourable regulatory treatment. It was viewed as one of the safest, most collateralised, and self-liquidating forms of finance. This was reflected in the moderate of capitalisation for cross-border trade credit in the form of letters of credit and similar securitised instruments under the Basel I regulatory framework put in place in the late 1980s and early 1990s.

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Topics:  International trade

Tags:  Basel II, global crisis, Trade finance

Export credit agencies to the rescue of trade finance

Jean-Pierre Chauffour, Christian Saborowski 23 January 2010

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New data on export insurance and guarantees suggest that export credit agencies (ECAs) have played an important role in preventing a complete drying up of trade finance markets during the current financial crisis. These efforts have complemented the support provided by international financial institutions and regional development banks and indicate that the call by the G20 leaders and the international community to ensure the availability of trade finance during the crisis has been largely followed through (Auboin 2009a,b).

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Topics:  Global crisis International trade

Tags:  Trade finance, trade collapse, trade insurance

Exports and financial shocks: New evidence from Japan

Mary Amiti, David E. Weinstein 23 December 2009

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One of the most striking features of the current crisis is the collapse in international trade – a fact highlighted by the recent Vox ebook.

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Topics:  Global crisis International trade

Tags:  financial crises, Trade finance, trade collapse

Decline and gradual recovery of global trade financing: US and global perspectives

Jesse Mora, William M. Powers 27 November 2009

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The collapse of Lehman Brothers in September 2008 is widely viewed as the spark that triggered the global economic crisis – what has come to be known as the “Great Recession.” Global credit markets froze, and this may have affected the specialised financial instruments – letters of credit and the like – that help grease the gears of international trade finance. Some analysts view this as contributing to the drop in global trade that occurred between the third quarter of 2008 and the second quarter of 2009 (Auboin 2009).

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Topics:  International trade

Tags:  Trade finance, great trade collapse, US trade collapse, trade credit

Trade finance in crisis

Jean-Pierre Chauffour, Thomas Farole 05 September 2009

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By providing liquidity and security to facilitate the movement of goods and services, trade finance lies at the heart of the global trading system. Indeed, as Auboin (2009) notes, trade finance – upon which some 80-90% of world trade relies – has become ever more critical as global supply chains have increasingly integrated in recent years:

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Topics:  International trade

Tags:  crisis, Trade finance

Banking crises and exports: Lessons from the past

Leonardo Iacovone, Veronika Zavacka 01 September 2009

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For most countries in the world, this is not a financial crisis – it is a trade crisis. For the first time since 1982, global trade flows will not grow. The latest IMF projections expect global trade in goods and services to drop 11% this year and stagnate next year. This collapse in trade has spread the global recession far beyond the couple dozen nations whose banks were involved in the financial wizardry that sparked the crisis.

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Topics:  International trade

Tags:  banking crises, Trade finance

The global financial crisis: A wake-up call for trade finance capacity building in emerging Asia

Wei Liu, Yann Duval 19 June 2009

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The current financial crisis has provided a useful reminder of how essential trade finance is to international trade. The capacity to trade is significantly affected by the availability and cost of financing and the availability of instruments to mitigate the risks associated with international trade transactions (Auboin and Meier-Ewert 2003; Thomas, 2009).1

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Topics:  International trade

Tags:  crisis, Trade finance, emerging Asia

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