STRUCTURED TRADE FINANCE AND ITS IMPORTANCE FOR EMERGING MARKETS

Scientific review article
Autor: Svetlana Magdelinić
JEL: F34, G15, G32

Summary: As a consequence of the financial crisis 2007-2008, trade finance has become more challenging, and gradually deteriorated. Exiting the crisis and eliminating its consequences requires certain efforts to restore the mechanisms and steps for the renewed trade growth to be integrated into the general tendencies for achieving strong, sustainable and balanced growth of the global economy. Given the fact that credit risk hinders the swift revival of trade finance, the focus has been placed on methods for credit risk elimination or mitigation. One of these methods is structured trade finance. This paper elaborates on structured trade finance as a risk transfer mechanism in the process of trade finance, whereby the risk gets transferred from the subjects less able to bear the risks to the subjects more able to bear them in a way that provides automatic reimbursement of advances from the borrower’s assets.

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