Trade Finance during the Great Trade Collapse

The bursting of the subprime mortgage market in the United States in 2008 and the ensuing global financial crisis were associated with a rapid decline in global trade. The extent of the trade collapse was unprecedented: trade flows fell at a faster...

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Bibliographic Details
Main Authors:	Chauffour, Jean-Pierre, Malouche, Mariem
Format:	Publication
Language:	English
Published:	World Bank 2012
Subjects:	ACCESS TO BANK ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLES ADVANCED ECONOMIES AFFORDABLE COST AFFORDABLE PRICES ASSET VALUE BAILOUT BANK CREDIT BANK FINANCING BANK LENDING BANKING CRISES BANKING CRISIS BANKING REGULATIONS BANKING SECTOR BANKING SUPERVISION BANKING SYSTEM BANKRUPTCY BANKS BARTER BONDS BORROWER BORROWER RELATIONS BORROWING CAPITAL ADEQUACY CAPITAL BASE CAPITAL FINANCE CAPITAL REQUIREMENTS CASH PAYMENTS CASH RESERVES CENTRAL BANK CHAMBER OF COMMERCE COLLECTIVE ACTION COMMERCIAL BANK COMMERCIAL BANKS COMMERCIAL LENDING COMMERCIAL PAPER COMMODITY PRICES CONTINGENT LIABILITIES CORPORATE FINANCE CREDIT AGENCIES CREDIT AGENCY CREDIT BUYER CREDIT CRUNCH CREDIT EXTENSION CREDIT FLOWS CREDIT GUARANTEES CREDIT LIMITS CREDIT LINE CREDIT LINES CREDIT MARKET CREDIT MARKETS CREDIT PRODUCTS CREDIT PROVIDERS CREDIT PROVISION CREDIT RISK CREDIT SQUEEZE CREDITOR CREDITORS CREDITS CREDITWORTHINESS CROSS-BORDER BANKING CUSTOMER DEMAND CUSTOMER RELATIONS CUSTOMER RELATIONSHIPS DEBT DEBT MARKET DEFAULTS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT BANK DEVELOPMENT BANKS DEVELOPMENT FINANCE DEVELOPMENT FINANCE INSTITUTION DEVELOPMENT FINANCE INSTITUTIONS DIRECT FINANCING DISCRIMINATION DIVERSIFICATION DURABLES ECONOMIC ACTIVITY ECONOMIC CRISIS ECONOMIC POLICY EMERGING ECONOMIES EMERGING MARKETS EQUITY CAPITAL EXCHANGE RATE EXCHANGE RATES EXPORTER EXPORTERS EXTENSION OF CREDIT EXTENSIONS OF CREDIT EXTERNAL DEBT FINANCE CONSTRAINTS FINANCE INITIATIVE FINANCIAL BURDEN FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DIFFICULTIES FINANCIAL DISTRESS FINANCIAL HEALTH FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENT FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL MEANS FINANCIAL RESOURCES FINANCIAL SERVICE FINANCIAL SERVICES FINANCIAL SUPPORT FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL CAPACITY FOREIGN CURRENCY FOREIGN EXCHANGE FORMS OF CREDIT GLOBAL ECONOMIES GLOBAL TRADE GOVERNMENT INTERVENTION GROSS DOMESTIC PRODUCT HOUSING FINANCE HUMAN RIGHTS IDS INCOME LEVELS INFORMATION ASYMMETRIES INFORMATION GAP INFORMATION TECHNOLOGY INSTITUTIONAL CAPACITY INSTITUTIONAL SUPPORT INSURANCE INSURANCE CORPORATION INSURANCE MARKET INSURANCE PREMIUMS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKING INTERNATIONAL DEVELOPMENT INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INTERNATIONAL FINANCIAL INSTITUTION INTERNATIONAL SETTLEMENTS INTERNATIONAL STANDARD INTERNATIONAL TRADE INVESTMENT BANK INVESTMENT CAPITAL INVESTMENT FINANCE LACK OF ACCESS LACK OF FINANCE LENDER LENDERS LETTER OF CREDIT LETTERS OF CREDIT LEVEL PLAYING FIELD LINE OF CREDIT LINES OF CREDIT LIQUIDATION LIQUIDITY LIQUIDITY CRISIS LIQUIDITY PROBLEM LOAN LOC MARKET CONSTRAINTS MARKET DISTORTIONS MARKET FAILURE MARKET SHARE MARKET SHARES MISSING MARKETS MONETARY FUND MONETARY POLICIES MORAL HAZARD MORTGAGE MORTGAGE MARKET MULTINATIONAL NEW MARKET NONPAYMENT POLITICAL RISK PRICE VOLATILITY PRIME LENDING RATE PRINCIPAL-AGENT PROBLEMS PRIVATE CREDIT PROBABILITY OF DEFAULT PROVISION OF FINANCE RECEIPTS RECESSION REGULATORY FRAMEWORK REPAYMENT RESERVE RESERVE BANK RETURN RISK MANAGEMENT RISK MITIGATION RULE OF LAW SECONDARY MARKET SECURITY INTEREST SHORT-TERM FINANCE SHORT-TERM FINANCING SHORT-TERM LENDING SMALL BANKS SOURCE OF FUNDS SOVEREIGN DEBT SOVEREIGN DEBT PROBLEMS SUBSTITUTE FOR BANK FINANCE SUPPLY CHAIN SUPPLY CHAINS SUPPLY OF CREDIT TRADE CREDIT TRADE FACILITATION TRADE FINANCE TRADE FINANCING TRADING TRADING SYSTEM TRANSPARENCY TRUST FUND UNION WORKING CAPITAL
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000333037_20110714010135 http://hdl.handle.net/10986/2324

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Summary:	The bursting of the subprime mortgage market in the United States in 2008 and the ensuing global financial crisis were associated with a rapid decline in global trade. The extent of the trade collapse was unprecedented: trade flows fell at a faster rate than had been observed even in the early years of the great depression. G-20 leaders held their first crisis-related summit in November 2008. The goal was to understand the root causes of the global crisis and to reach consensus on actions to address its immediate effects. In the case of trade, a key question concerned the extent to which a drying up of trade finance caused the observed decline in trade flows. This book brings together a range of projects and studies undertaken by development institutions, export credit agencies, private bankers, and academics to shed light on the role of trade finance in the 2008-09 great trade collapse. It provides policy makers, analysts, and other interested parties with analyses and assessments of the role of governments and institutions in restoring trade finance markets. A deeper understanding of the complexity of trade finance remains critical as the world economy recovers and the supply of trade finance improves. The international community continues to know too little about the fragility of low income economies in response to trade finance developments and shocks, as well as about the ability and conditions of access to trade finance by small and medium enterprises and small banks in developing countries. Similarly, there is uncertainty regarding the impact on trade finance of recent changes in the third Basel regulatory framework.

Trade Finance during the Great Trade Collapse

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