A Research On Domestic Letters Of Credit Trade Financing And Risk

On July 16th 1997,the People's Bank of China announced Method of settlement of domestic letter of credit.Since then,the domestic letter of credit have been established as a settlement tool for domestic trade.In the face of the new market environment,the demand of enterprises and the appeal of each bank,the people's Bank of China and the China Banking Regulatory Commission revised the Method of settlement of domestic letter of credit Was announced and implemented on October 8th 2016.With the rapid development of domestic letter of credit business,commercial banks have given their trade financing functions on the basis of the basic settlement function of domestic letters of credit.However,the domestic letter of credit in the vigorously developed but also derived a lot of trade financing business implied a variety of risks.It brings a lot of troubles to the operation and management of the bank,which is exactly what this article would like to focus on.This paper consists of five parts:This article uses comparative analysis,qualitative analysis and case analysis methods.The first part is introduction,the second part is view of research related to this subject,the third part describes the basic concept of domestic letter of credit,financing principles and domestic trade financing business development status.This paper introduces the main kinds of domestic letter of credit trade financing business and makes a comparative analysis.The fourth part of the article introduces the main risks and causes of the domestic letter of credit trade financing business of commercial banks.The fifrth part of the article expounds the risk management strategy of domestic letter of credit trade financing business of commercial banks,and puts forward targeted suggestions on how to prevent these risks.The last part is conclusion.