Risks And Countermeasure For International Trade Finance Under Documentary Credit

Historically, banking business has a close relationship with foreign trade. And international trade finance (ITF) under documentary credit (DC) hold a special status in this field. Since reform and opening–up, such financing business in domestic commercial bank is in the ascendant. ITF under DC has some specialties, such as short-term, clearness of trade background, definite return and so on, which play an important action on reducing the risk of the finance. however, many problems have still appeared in our bank because of the shortage of the experience in such scopes. Combining theory and pratice, this thesis analyzes the types and causes of financing risk and brings forward the precaution measurements and countermeasures in the field of ITF under DC, which will be helpful to the decision-maker of the commercial bank. This thesis consists of six chapters: Chapter 1. summarization of letter of credit Stating the history of letter of credit (LC) simply. Summing up the conception and characteristic of the DC. Presenting the method of classifying the LC and expounding some kinds of DC in common use. Chapter 2. types and characteristic of ITF unde DC giving the signification of ITF. Presenting the types of ITF under DC concretely, including opening LC, shipment guarantee, trust receipt loan, packing loan, negotiation, discount, buying receivable and forfeiting. Summarizing five pieces of characteristic of ITF under DC.