International Trade Finance Business And Its Risk Prevention Study

This article first describes the importance of international trade finance on world economic globalization. Then it describes general situation about international trade finance, the writer traced from its origin and history to current development, listed its three new main characteristics, expatiates its function and introduces current situation and prospective trendy of international trade finance in detail. In the second part of this article, the writer expounds types of international trade finance in export aspect and import aspect. For export trade finance, it involves overdraft and loan, packing loan, letter of credit negotiation, outward documentary collection advance, export discount and etc; for import trade finance, it includes limit for letter of credit, trust receipt, inward bills receivables, delivery against banking guarantee, inward documentary collection advance and etc. Other than these points, this article emphasized on forfeiting and factoring as the newest two operations and gives a profound explanation. In the third part of this article, the writer anglicized customer reputation risk, trade risk, financial fraud risk, currency risk, country and political risk faced by banks and enterprises in the process of international trade finance. Then, it analysis reasons that lead to international trade finance risks from two sides: conversing choice and ethical risk. At the last part of this article, the writer probes into how to keep I/E enterprises and bankers away from risks in international trade finance. For I/E enterprises the writer emphasized on precaution measurements to currency risk. Focusing on banks, integrating with self-working practice, the writer brings forward countermeasures from nine aspects, also the writer analysis respective risks for the common four international trade finance operations such as export negotiation, import bills advance, delivery against banking guarantee and packing loan. And then it demonstrates some practical risk management methods. In the end, the writer brings forward its own thought whether it is necessary for the commercial bank to complete the regulation of how to operate international trade finance business so strictly. The writer hopes this thought is helpful to the director in decision-making and to the economist in scientific argument.