Research On Risk Identification And Prevention Of Trade Financing Under Foreign Bank Letters Of Credit

Looking at the economic situation at home and abroad in recent years,the Not-performing loan rate of trade financing has risen seriously and the development of enterprises is facing reform.The external shocks and internal contradictions make banking industry facing a double test.The ability of foreign banks to resist the risk of trade financing under letter of credit is also facing a major test.In this view,the paper takes the foreign banks as the main object,using the method of literature and induction to enumerate the two main financing types of the foreign banks' trade financing under the letter of credit,and then puts forward the identification of the trade financing under the credit of the foreign banks.Firstly,the paper described the overall risk environment of the foreign bank's trade financing under LC;and then,the risk structure of the foreign bank's trade financing under the letter of credit is summarized,and the risk is recognized and identified.Finally,it is concluded that the trade financing under the foreign bank credit is mainly faced with three kinds of risk categories: credit risk,operation risk and market risk,among which the credit risk and operation risk are more important faced and their causes are analyzed.Based on the theory of the third chapter,this paper puts forward the risk prevention strategy for the three types of risks and aims at the development of the current financial environment,the new supply chain financing mode is proposed for the traditional trade fina ncing with the new concept of finan cial techno log y.Besides,through literature method,this paper has consulted large number of books on the risk of foreign banks' credit on trade financing,and carried out some analysis and Research deeply on the issues with the help of the Internet and other tools.Finally,the paper summed up some practical suggestions and practical significance for commercial banks in China which make practical significance in practical operation and management.