Mind the trade finance gap: more so in times of stress

Sephooko I. Motelle ()
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Sephooko I. Motelle: IFC World Bank Group

Development Finance Agenda, 2022, vol. 7, issue 2, 10

Abstract: As the world faces serial shocks, prompt policy action is needed to address the trade finance gap, support trade and growth during the recovery. To be successful, collaborative effort between governments, firms, and development partners is imperative. Governments must target the structural drivers of the gap. For example, the credit ratings of banks can be improved through cost effective anti-money laundering and combating of terrorism (AML/CFT) frameworks to prevent the loss of correspondent banking relationships. Improvements in financial infrastructure can also play a vital role in addressing the information opacity of SMEs. Despite still at low ebb, the adoption of digital technology can also play a role in this respect making it necessary to address the digital divide.

Date: 2022
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