Chapter 16: Introduction to International Trade Finance
Chapter 16 Introduction
Learning Objectives
After reading this chapter, you should be able to
- Describe the basic aspects of international trade finance.
- Identify the key stakeholders in trade finance.
- Describe the major risks involved in trade finance.
- Describe the risk management cycle used to manage trade risk.
- Discuss trade finance risk mitigation tools.
Think About It!
Video: What Is Trade Finance?
Before reading this chapter, watch this video outlining the basic aspects of trade finance.
Source: Trade Finance Global. (2016, July 7). What is trade finance? [Video]. YouTube. https://www.youtube.com/watch?v=OHvOyUGcC5Y
Test Yourself
Introduction
Trade finance plays a critical role in trade transactions. The users of trade finance are always in need of funds to complete their trade transactions and are helped by trade finance providers who fulfil such financing needs. Along with the need of money, exporters and importers are also concerned about the risks they face in cross-border trading. It makes it easy for stakeholders to operate globally if they are aware of these risks as they can then find ways to manage them. Managing risk usually involves taking steps to identify, assess and control the risks to increase the earnings of international traders. Mitigating risk involves lowering of exposure to the various risks often using trade finance instruments provided by financial institutions.
