Research On Risk Management Of Trade Finance

In recent years,China has issued a series of prudent monetary policies,and the overall social capital has shown a tight pattern,resulting in an increasingly prominent imbalance in capital supply and demand.Although the state has repeatedly stressed the need to support the development of small and medium-sized enterprises and encourage financial institutions to lend to potential small and medium-sized enterprises,in reality their financing difficulties are still grim.Financial institution owners,mainly banks,have relatively perfect risk management mechanisms and many investment options to choose from.Small and medium-sized enterprises do not have an advantage,especially small and medium-sized traditional manufacturing enterprises,which have problems of large asset value variables and difficult realization of assets.At the same time,some large and medium-sized stateowned enterprises have rigid systems and poor profitability,making it difficult to meet various performance evaluation standards,but they have sufficient funds and obvious credit advantages.Under this background,it is easy for small and mediumsized enterprises and some large and medium-sized state-owned enterprises to reach cooperation agreements and carry out financing trade business for the purpose of financing.Financing trade is a double-edged sword.If properly applied,it can not only alleviate the problem of financing difficulties of small and medium-sized enterprises in China,but also increase profit channels for large and medium-sized state-owned enterprises and promote economic development.However,what cannot be ignored is that in actual operation,the negative effects of financing trade are more obvious,and some state-owned enterprises that blindly participate in it have suffered heavy losses,resulting in the loss of state-owned assets.SASAC has also repeatedly stressed that central enterprises should not blindly invest in order to expand their scale and pursue interests.However,this thesis holds that the causes of asset losses caused by financing trade lie more in the enterprise itself than in the inherent risks of financing trade itself.For example,due to lack of understanding of financing trade business,asymmetric information among enterprises,lack of corresponding risk control mechanism to identify and evaluate risks in business,supervision of goods and capital flow,etc.,enterprises cannot take targeted risk control measures in advance or in time for sudden risks.Furthermore,it is unrealistic to ban financing trade completely.What can be done at present is to constantly expose the risks existing in financing trade,so that enterprises can have a clearer understanding of financing trade,and at the same time to put forward more perfect risk control measures to help enterprises reduce risks in their business.Firstly,on the basis of a large amount of literature research,this thesis summarizes and analyzes how to identify financing trade and its main modes,risks under each mode and risk response measures respectively.Then,through The case study of financing trade business between C corporation and A Steel Group is conducted to sort out all the transaction processes involved in financing trade business from the beginning to the end of the business,identify and analyze the risk factors unfavorable to fund providers in each process,and propose specific risk control measures accordingly.The purpose of this article is to help fund providers to fully understand the risks in financing trade and how to control them,so as to reduce the negative impact of financing trade.However,any investment is risky.What enterprises need to do is to control the risk within an acceptable range.Therefore,this thesis suggests that enterprises should fully analyze the advantages and disadvantages behind such financing trade,and carefully decide whether to carry out the business on the basis of controllable risks and without affecting the development of the main business.The main Contribution of this thesis lies in the comprehensive induction and analysis of the financing trade risk management and control theory,and the introduction of case analysis to show how to combine theory with practice to make it easier to understand and apply the theory.Secondly,financing trade is more common in large amount of bulk commodity trade.In this case,Financing Founder is A Iron and Steel Group,which produces one of the bulk commodities,and has high reference value for the research on risk control of financing trade.Finally,due to the lack of in-depth and specialized academic research literature in the field of financing trade in our country,in order to make up for the shortage of direct literature,this thesis refers to the mature theoretical research on trade credit and trade finance at home and abroad.