What Drives Bank-Intermediated Trade Finance? Evidence from Cross-Country Analysis

26 Pages Posted: 17 Sep 2015

See all articles by José María Serena

José María Serena

Bank for International Settlements (BIS)

Garima Vasishtha

International Monetary Fund

Date Written: September 16, 2015

Abstract

Empirical work on the underlying causes of the recent dislocations in bank-intermediated trade finance has been limited by the scant availability of hard data. This paper aims to analyse the key determinants of bank-intermediated trade finance using a novel dataset covering ten banking jurisdictions. It focuses on the role of global factors as well as country-specific characteristics in driving trade finance. Results indicate that country-specific variables, such as growth in trade flows and funds available for domestic banks, as well as global financial conditions and global import growth, are important determinants of trade finance. These results are robust to different model specifications. Further, we do not find that trade finance is more sensitive to global financial conditions than other loans to non-bank entities.

Keywords: bank-intermediated trade finance, trade flows, global financial crisis

JEL Classification: F14, F19

Suggested Citation

Serena, Jose Maria and Vasishtha, Garima, What Drives Bank-Intermediated Trade Finance? Evidence from Cross-Country Analysis (September 16, 2015). Banco de Espana Working Paper No. 1524, Available at SSRN: https://ssrn.com/abstract=2661370 or http://dx.doi.org/10.2139/ssrn.2661370

Jose Maria Serena (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Garima Vasishtha

International Monetary Fund ( email )

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