Trends in Trade Finance across the APEC Region

Issues Paper No.4

 

Trade finance is critical for cross-border trade for at least two reasons: (1) it provides the necessary insurance against counterparty risk; and (2) it provides working capital, which is vital to the maintenance of a healthy cash flow especially given the long time lag in international trade between production of the goods and receipt of payment. This issues paper has been prepared to analyse the trends in trade finance since the 2008 Global Financial Crisis (GFC) and to assess the current situation. In doing so, it also presents the results of the APEC 2013 Trade Finance Survey that was conducted among the APEC members. The study found that while the overall market for trade finance has improved since the GFC, the recovery has been patchy and a number of challenges remain, including the difficulties that SMEs face in accessing trade finance and the impact of regulatory measures on the provision of trade finance. The report also offers a number of policy recommendations for APEC members and for APEC as a whole to address some of the current challenges to trade finance.