On September 15, 2008, Lehman Brothers, the fourth largest U.S.
investment bank filed for bankruptcy. Global credit markets tightened.
Spreads skyrocketed. International trade plummeted by double digits.
Banks were reportedly unable to meet the demand from their customers to
finance their international trade operations, leaving a trade finance
“gap” estimated at around US$25 billion. Governments and
international institutions felt compelled to intervene based on the
information that some 80-90 percent of world trade relies on some form
of trade finance. As the recovery unfolds, the time has come to provide
policy makers and analysts with a comprehensive assessment of the role
of trade finance in the 2008-09 great trade collapse and the subsequent
role of governments and institutions to help restore trade finance
markets.
After reviewing the underpinning of trade finance and interfirm
trade credit, "Trade Finance during the Great Trade Collapse"
aims to answer the following questions:
- Was the availability and cost of trade finance a major constraint
on trade during the 2008-09 global economic crisis?
- What are the underpinnings and limits of national and international
public interventions in support of trade finance markets in times of
crisis?
- How effective were the public and private sector mechanisms put in
place during the crisis to support trade and trade finance?
- To what extent have the new banking regulations under Basel II and
Basel III exacerbated the trade finance shortfall during the crisis and
in the post-crisis environment, respectively?
Trade Finance during the Great Trade Collapse is the product
of a fruitful collaboration during the crisis among the World Bank
Group, international financial partners, private banks, and
academia.
'Trade is the lifeblood of the world economy, and the sharp
collapse in trade volumes was one of the most dramatic consequences of
the global financial crisis. It was the moment the financial crisis hit
the real economy, and when parts of the world far from the epicenter of
financial turbulence felt its full fury. This book is extremely timely
and full of critical insights into the role of trade finance and the
potential damaging impact from the unintended consequences of
regulatory changes.'
— Peter Sands, CEO, Standard Chartered
Bank
- Shipping Weight: 1.28 lbs (0.58 kgs)
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