Risks Study On Trade Finance Under Letter Of Credit To Commercial Bank

Letter of Credit (Called'Credit'for short), one of main facilities of international trade settlement with particular law character, reconciles the unbelieving importer and exporter. It promotes the development of international trade rapidly, and was praised as the activator of international trade, also regarded as the potent means to expand foreign business market and service customers by commercial bank. Nevertheless, the characteristics of credit can also be used in criminal actions. Some criminals set up systems to fraud against innocent businessmen and banks. Because of lacking in experience of Credit risks management, banks may be suffered a lot. Especially, this condition is very serious in our country. This thesis analyzes the origination of the risks under Letter of Credit through cases. Then it presented suggestions of prevention and controlling. Firstly, the thesis briefly introduces the basic concept of documentary credit, its financing principle, and the developing course of trade financing. Secondly, the thesis expounds the risks of trade financing under Credit, emphasizes credit fraud risk, legal risk and the credit without true trade background, the writer systematically demonstrates relevant cause of formation. Thirdly, as part of the main topic of this thesis, the writer definitely presents that commercial bank should exactly measuring the risks of trade financing, rationally choose and evaluate the customer by adopting admittance system, and improve the model granting credit. Subsequently, the writer suggests that commercial bank should intensify inner management, establish the risk controlling system, standardize operating process, availably control title of...