Trade Finance during the Great Trade Collapse

Jean-Pierre Chauffour And Mariem Malouche

Description

On September 15, 2008, Lehman Brothers, the fourth largest U.S. investment bank filed for bankruptcy. Global credit markets tightened. Spreads skyrocketed. International trade plummeted by double digits. Banks were reportedly unable to meet the demand from their customers to finance their international trade operations, leaving a trade finance 'gap' estimated at around US$25 billion. Governments and international institutions felt compelled to intervene based on the information that some 80-90 percent of world trade relies on some form of trade finance. As the recovery unfolds, the time has come to provide policy makers and analysts with a comprehensive assessment of the role of trade finance in the 2008-09 great trade collapse and the subsequent role of governments and institutions to help restore trade finance markets.
After reviewing the underpinning of trade finance and interfirm trade credit, 'Trade Finance during the Great Trade Collapse' aims to answer the following questions:
- Was the availability and cost of trade finance a major constraint on trade during the 2008-09 global economic crisis?
- What are the underpinnings and limits of national and international public interventions in support of trade finance markets in times of crisis?
- How effective were the public and private sector mechanisms put in place during the crisis to support trade and trade finance?
- To what extent have the new banking regulations under Basel II and Basel III exacerbated the trade finance shortfall during the crisis and in the post-crisis environment, respectively?
'Trade Finance during the Great Trade Collapse' is the product of a fruitful collaboration during the crisis among the World Bank Group, international financial partners, private banks, and academia.
'Trade is the lifeblood of the world economy, and the sharp collapse in trade volumes was one of the most dramatic consequences of the global financial crisis. It was the moment the financial crisis hit the real economy, and when parts of the world far from the epicenter of financial turbulence felt its full fury. This book is extremely timely and full of critical insights into the role of trade finance and the potential damaging impact from the unintended consequences of regulatory changes.'
--Peter Sands, CEO, Standard Chartered Bank

Sujets

• Trade finance
• Gunning transceiver logic
• Credit (finance)
• International Bank
• Liquidity crisis
• Trade credit
• Private sector development

Informations

• Publié par: world-bank-publications
• Publié le: 22 juin 2011
• Nombre de lectures: 39
• EAN13: 9780821387498
• Langue: English
• Poids de l'ouvrage: 2 Mo

Extrait

Trade Finance
during the
Great Trade
Collapse
Editors
DULHP0-LHUUH&KDXIIRXU?0DORXFKHHDQ%3Trade Finance
during the Great
Trade CollapseTrade Finance
during the Great
Trade Collapse
Jean-Pierre Chauffour and Mariem Malouche
Editors© 2011 The International Bank for Reconstruction and Development / The World Bank
1818 H Street NW
Washington DC 20433
Telephone: [phone]
Internet: www.worldbank.org
All rights reserved
1 2 3 4 14 13 12 11
This volume is a product of the staff of the International Bank for Reconstruction and Development / The World
Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of
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ISBN: 978-0-8213-8748-1
eISBN: 978-0-8213-8749-8
DOI: 10.1596/978-0-8213-8748-1
Library of Congress Cataloging-in-Publication Data
Chauffour, Jean-Pierre.
Trade finance during the great trade collapse / Jean-Pierre Chauffour and Mariem Malouche.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-8213-8748-1 — ISBN 978-0-8213-8749-8 (electronic)
1. Export credit. 2. Exports—Finance. 3. Financial crises. 4. International trade. I. Malouche, Mariem,
1973- II. Title.
HG3753.C435 2011
332.7'42—dc22
2011012219
Cover photos: © moodboard/Corbis (Money Rolls); Adobe Image Library (background)
Cover design by Tomoko Hirata/World Bankcontents
Foreword xi
Acknowledgments xiii
About the Editors and Contributors xv
Abbreviations xix
Overview 1
Section I SPECIFICITY OF TRADE CREDIT AND TRADE
FINANCE DURING CRISES 25
1 Trade Credit versus Bank Credit during
Financial Crises 27
Inessa Love
2 Firms’ Trade-Financing Decisions during Crises 41
Daniela Fabbri and Anna Maria C. Menichini
3 Interfirm Trade Finance: Pain or Blessing during
Financial Crises? 59
Anna Maria C. Menichini
4 Financial Crisis and Supply-Chain Financing 73
Leora Klapper and Douglas Randall
Section II TRADE FINANCE DURING THE 2008–09 CRISIS:
INNOCENT OR GUILTY? 87
5 Trade Finance in the 2008–09 Financial Crisis:
Evidence from IMF and BAFT–IFSA Surveys of Banks 89
Irena Asmundson, Thomas Dorsey, Armine Khachatryan,
Ioana Niculcea, and Mika Saito
6 Global Perspectives in the Decline of Trade Finance 117
Jesse Mora and William Powers
vvi Contents
7 The Role of Trade Finance in the U.S. Trade
Collapse: A Skeptic’s View 133
Andrei A. Levchenko, Logan T. Lewis, and Linda L. Tesar
8 Trade Finance in Africa: A Survey of Firms 149
John Humphrey
9 Financial Crises and African Trade 161
Nicolas Berman and Philippe Martin
10 World Bank Firm and Bank Surveys in
14 Developing Countries, 2009 and 2010 173
Mariem Malouche
11 Private Trade Credit Insurers during the Crisis:
The Invisible Banks 199
Koen J. M. van der Veer
12 Trade Finance in the Recovery of Trade Relations
after Banking Crises 213
Cosimo Beverelli, Madina Kukenova, and Nadia Rocha
Section III UNDERPINNINGS OF TRADE FINANCE
INTERVENTION DURING FINANCIAL CRISES 233
13 The Theoretical Case for Trade Finance in
a Liquidity Crisis 235
Tore Ellingsen and Jonas Vlachos
14 Why Boosting the Availability of Trade Finance
Became a Priority during the 2008–09 Crisis 245
Jean-Jacques Hallaert
15 Market Adjustment versus Market Failure 257
Jean-Pierre Chauffour and Thomas Farole
16 Should Developing Countries Establish
Export Credit Agencies? 273
Jean-Pierre Chauffour, Christian Saborowski, and
Ahmet I. Soylemezoglu
Section IV INSTITUTIONAL TRADE FINANCE SUPPORT
DURING THE 2008–09 FINANCIAL CRISIS 287
17 World Trade Organization Response to the Crisis:
A Convening Power to Boost the Availability
of Trade Finance 289
Marc AuboinContents vii
18 The World Bank Group’s Response to the Crisis:
Expanded Capacity for Unfunded and Funded
Support for Trade with Emerging Markets 301
Bonnie Galat and Hyung Ahn
19 Regional Development Banks’ Response to
the Crisis: Scaling Up the Trade Finance Facilities 319
Rudolf Putz, Ghazi Ben Ahmed, Steven Beck,
and Daniela Carrera
20 Credit Insurance in Support of International Trade:
Observations throughout the Crisis 337
Fabrice Morel
21 Business Responding to the Financial Crisis:
Setting Up a Policy Agenda for Trade Finance 357
Thierry J. Senechal
22 Private Bankers’ Response to the Crisis:
Warnings about Changes to Basel
Regulatory Treatment of Trade Finance 373
Donna K. Alexander, Tan Kah Chye, Adnan Ghani, and
Jean-François Lambert
23 Trade Finance under the Current Basel
Regulatory Framework: What are the Issues? 385
Marc Auboin
Index 393viii Contents
Boxes
5.1 The IMF/BAFT-IFSA and Other Bank Surveys 97
5.2 Key Findings and Observations from the
Fifth Trade Finance Survey 114
6.1 Common Types of Trade Finance and the Risk for Exporters 119
10.1 Policy Update on Selected Countries and Multilateral Initiatives 189
19.1 Terms and Conditions of TFI Credit Products 325
19.2 IDB Trade Financing Increases Intraregional Transactions 330
20.1 Credit Insurance and How It Works 338
20.2 The Berne Union 354
Figures
O.1 Trade Fluctuations by Region, 2007–10 2
O.2 Trade Finance Arrangements, by Market Share 4
2.1 Regime where the Incentive Motive Dominates 49
2.2 Rege the Liquidation Motives 51
2.3 Trade Credit Intensity, Wealth, and Creditor Protection 53
2.4 Input Tangibility, Wealth, and Creditor Protection 54
4.1 Extension of Trade Credit, by Country 75
4.2 Changes in the Extension of Trade Credit, by Country 76
4.3 Access to Bank and Supplier Financing, by Country 78
4.4 Trade Credit and Liquidity 83
5.1 Trade Finance Arrangements, by Market Share 90
5.2 Merchandise Trade Index, 2007 to mid-2010 92
5.3 Global Funding Pressure, 2008 t 93
5.4 Three-Month LIBOR Spreads in Advanced Markets 94
5.5 External Debt Market Spreads in Emerging Markets,
2008 to mid-2010 95
5.6 Loans to Nonfinancial Firms in the Euro Area and
U.S., 2007 to mid-2010 95
5.7 U.S. Commercial Paper: Outstanding Accounts,
2008 to mid-2010 96
5.8 Overall Changes in Merchandise Exports and Trade Finance 100
5.9 Changes in Merchandise Exports and Trade Finance,
by Country Group 101
5.10 Estimated Composition of the Trade Finance Industry 102
5.11 Overall Change in Trade-Related Lending Guidelines,
Q4 CY09 vs. Q4 CY08 104
5.12 Ability to Satisfy “All Customer Needs” 106
5.13 Effect of “Recent Developments” on Pricing of
Trade Instruments 110
5.14 Change in Trade Instrument Pricing 111
5.15 Change in Probability of Default, 2007–09 113