The meaning and role of international trade financing

1. The meaning of trade financing

Trade financing refers to the close integration of financing and trade to facilitate the smooth operation of trade. Carry out financial activities that provide a series of financing services for required funds. In trade finance, trade goods are used as collateral to financing institutions (banks and companies), so that companies with insufficient credit can also improve their credit value and increase their credit ability to obtain funds. Compared with general financial communication, the scope of trade finance fund providers has been greatly expanded. Fund providers participating in trade financing usually include: commercial banks, manufacturing enterprises, official import and export credit agencies, various international multilateral development banks, policy banks, insurance companies and other non-bank financial institutions and professional financing service companies. Trade finance can realize financial communication in various forms, generally including direct financing and indirect financing. Direct financing activities mainly include: advance payment by the buyer, deferred payment by the seller, and purchase loans; indirect financing activities mainly include various guarantee commitments and borrowings from insurance and guarantee institutions. These guarantees and borrowings are based on Based on accounts receivable as collateral, such as financial leasing, letter of credit business, factoring business (accounts receivable purchase), various forms of credit insurance financing and bonds based on trade cash flow, such as DPR (diversified payment right) ,DPR) support bonds, etc.

Trade financing closely combines trade and financing activities and links guarantee arrangements with trade goods. Financing parties have incentives to promote sales and customer information. It is relatively understood that in order to promote the effective development of trade activities, relevant government departments have relatively supported trade financing activities that can effectively promote trade activities, so that trade financing has considerable stability in economic activities and is less affected by economic crises and financial crises. . Therefore, the financing channels for trade finance are relatively stable, which is conducive to the smooth operation of the economy. Trade finance closely integrates trade and financing, which is the key to solving trade-centered operating capital needs; the close integration of trade and financing can not only solve financing problems, but also expand the development of trade activities. Combining trade and financing can be achieved not only through financial instruments, but also through the introduction of professional financial institutions, such as financial service companies and financial leasing companies established by various automobile groups to promote automobile sales and provide financial services.

2. The role of international trade financing

International trade financing combines international trade and international financing , especially conducive to the expansion and development of international economic exchanges and conducive toThe development of international trade contributes to the integration and globalization of the world economy. Specifically, the development of international trade financing plays the following roles in maintaining the stability and development of the world economy.

1) Improve the credit capabilities of developing countries (creditworthy). Commercial banks are usually willing to issue loans with trade goods as collateral in order to obtain sufficient risk protection and intermediary services such as exchange settlement. Suppliers and buyers are willing to provide loans or other assistance, such as early payment, deferred payment, guarantee, etc., to enterprises with which they have business ties. Because through trade and business exchanges, the information between the two parties is more transparent, so the credit risk of the other party can be evaluated more accurately. On the other hand, by providing trade financing services, financing service providers can not only obtain corresponding financing service income, but also maintain good relationships with customers, maintain close ties with customers, and consolidate and expand the market. Developing countries usually have low credit capacity due to their backward economic development. Since the success of trade financing depends more on the trade activity itself or the credit value of the trade goods, and less on the conditions of the trading parties, the threshold for trade financing activities is relatively low, so international trade financing The activities are also conducive to improving the credit capabilities of developing countries.