Studies Of Risks In Documentary Credit Finance

Documentary Credit (DC) is a kind of international banking business. It has come into all fields of bank's trade finance, provide facilities to trading parties, promote the development of the business. From concepts, kinds of DC and trade finance, further analysis of status of DC in practice, It sets forth that DC is not only a mechanics of international settlement, but also is an important financing means, it takes most important role in the international trade.In spite of less risk coefficient compared with traditional credit/loan, many kinds of risks coexist in such a special financing mechanism. At present, Overdue repayment of trade finance is a knotty problem of banking circle. The dissertation Documentary Credit in China's Trade Finance is discussing this issue. The writer thinks that the most important of risks in China's DC finance is: the bank cannot control and dispose of title of goods or tide documents so as to liquidate the liabilities under DC, therefore Laws ant! Regulations of Economy, such as Law of Tide, Law of Trust, and etc should be legislated. This may arouse or do help to studies or discussions of judicial circle or banking sector.From practice of China's DC finance, it demonstrated that DC transaction faces all risks during the course of international trade, besides of common credit risks, finally it comes into conclusion on how to prevent, mitigate and transfer such risks and how to make full use DC in the international trade.