Letters of credit are a key trade finance instrument that covers more than 10 percent of global trade, with a notably larger role in low-and middle-income economies. Studying detailed trade data from Viet Nam, we document how letter of credit use varies with firm characteristics. We show that...

Export credit agencies (ECAs) play an important role in international trade by providing derisking instruments that function as public assistance to companies engaging in international commerce. As the geopolitical environment has become more fraught, this support has become ever more important....

This study investigates the impact of export credit support provided by export credit agencies (ECAs) on exports among G20 countries before, during, and after the 2008 Global Financial Crisis (GFC). Using an augmented gravity model and the autoregressive distributed lag approach, we analyze...

International trade with unfamiliar stakeholders poses challenges of trust, payment security, and regulatory compliance. Letters of Credit (LC) help mitigate these risks but rely on manual, error prone processes that lead to delays, high costs, and limited scalability. This study proposes a...

This paper examines the impact of access to finance on intra-Africa trade efficiency using a panel dataset comprising 44 African exporters. Between 2008 and 2021, a stochastic frontier version of the gravity model finds intra-Africa trade to have been lower than its full potential by $1.1...

We use panel data for listed firms from China for 2013-2021 to examine the association between their export earnings and trade finance, particularly those receiving trade loans. Results show that a percent increase in trade finance loan is associated with 0.067-0.083 percent increase in export...

We study how terminated correspondent banking relationships affect international trade. Drawing on firm-level export data from emerging Europe, we show that when local banks lose access to correspondent services, their corporate clients experience significant export declines. This trade...

This paper uses U.S. credit register data and the 2018-19 Trade War to study the effects of uncertainty on domestic credit supply. Exploiting differences in banks' ex-ante exposure to trade uncertainty, we find that increased uncertainty is associated with a broad lending contraction across...

Banks guarantee international trade through letters of credit. This paper analyzes what happens to trade when the critical role of banks as trade guarantors is compromised. Using the case of the Greek capital controls in 2015, the events around which led to a massive loss of confidence in the...

We analyse the impact of trade credit on international trade in Nigeria. Specifically, we quantify the impact of micro trade credit, measured by account receivables, bank credit and account payables on firms’ export and imports. Throughthe theoretical lens of the partial equilibrium theory, we...

Banks guarantee international trade through letters of credit. This paper analyzes what happens to trade when the critical role of banks as trade guarantors is compromised. Using the case of the Greek capital controls in 2015, the events around which led to a massive loss of confidence in the...

In this paper we integrate the costs of trade finance in a computable general equilibrium (CGE) model to evaluate the trade and output effects of counterfactual policy experiments on costs of and access to trade finance. The costs of financing international trade consist of two components: the...

A joint study by the WTO and IFC established that the low share of trade supported by trade finance (25%) in the four largest economies of West Africa (Nigeria, Côte d'Ivoire, Ghana and Senegal) was a major constraint in further expanding and diversifying trade flows and trade integration....

This paper analyzes the impact of financial development on export concentration. I incorporate credit constraints into a trade model with heterogeneous exporters and endogenous quality choice. The model predicts that financial development increases innovation activity and export shares of larger...

Cambodia, the Lao People’s Democratic Republic and Viet Nam – the so-called Mekong-3 - have experienced rapid trade growth over the last ten years. However, growth could be boosted even further by improving access to trade finance, such as loans and guarantees, for locally owned businesses...

We exploit proprietary information on severed correspondent banking relationships (due to the stricter enforcement of financial crime regulation) to assess how payment disruptions impede cross-border trade. Using firm-level export data from emerging Europe, we show that when local respondent...

This paper uses U.S. loan-level credit register data and the 2018-2019 Trade War to test for the effects of international trade uncertainty on domestic credit supply. We exploit cross-sectional heterogeneity in banks' ex-ante exposure to trade uncertainty and find that an increase in trade...