Why does finance matter for trade? Evidence from new data
Marc Auboin, Martina Engemann 03 December 2012
What effect does trade finance have on international trade? This column uses new data to stress the importance of trade finance for international trade both in crisis and in non-crisis periods. The major policy lesson is that there must be high levels of market incentives for supplying trade credit, particularly during a period of ‘deleveraging’ of the financial system. That said, trade credit statistics could be vastly improved if we wish to continue comparing global trade finance transactions against global trade.
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).
trade, international trade, financial crisis, Trade finance, Great Recession, trade credit, trade insurance
Export credit agencies to the rescue of trade finance
Jean-Pierre Chauffour, Christian Saborowski 23 January 2010
What saved trade from collapsing totally during the global crisis? This column argues that export credit agencies played a key role in stabilising the trade finance market, and thus helped reduce credit risks and allowed exporters to offer open account terms in competitive markets.
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).
Global crisis International trade
Trade finance, trade collapse, trade insurance