The global trade finance market size is estimated at USD 8014110 million in 2021 and is projected to reach a readjusted size of USD 11631260 million by 2028 at a CAGR of 5.4% during the forecast period 2022-2028.
The major factors driving the growth of the trade finance market are
Benefits such as flexibility, convenience, security, and transaction flow are expected to increase adoption, thereby driving the growth of the trade finance market.
In addition, an increase in the use of trade finance by SMEs in emerging countries, increased competition and new trade agreements are the main drivers for the expansion of the market. Also, during the forecast period, it is expected that the use of blockchain technology in trade finance will present attractive market prospects.
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TRENDS INFLUENCING THE GROWTH OF THE TRADE FINANCE MARKET
The growth of the trade finance market is expected to be fueled by an increase in cross-border trade. International trade is a risky industry because exporters may not deliver if paid in advance and importers may not pay after getting the goods. International trade finance service providers give a letter of credit to handle these payment issues. Payment for items is secured by this document as soon as the necessary shipping documents are in order. A trade finance intermediary will also manage collections from SMEs while keeping an eye on the creditworthiness of their clients.
An increase in the adoption of trade finance by SMEs in developing countries is expected to drive the growth of the trade finance market. Small businesses around the world often have extremely limited access to loans and other types of temporary financing to pay the cost of assets they intend to acquire or sell. The short- to medium-term working capital provided by trade finance has helped importers and exporters bridge the financial gap. It also ensured the security of imported or exported goods or services, as well as enabled risk mitigation through supporting structures or products. Small businesses can trade larger volumes more easily because they have more trade credit for end customers. Due to the growing importance of the trading system, overcoming trade restrictions such as those related to abnormal behavior detection and risk-based discovery helps the trade finance industry thrive.
The complexity of transactions involving trade finance is a significant issue for MSMEs. Complex workflows involve multiple parties, resulting in a lot of manual work and frequently requiring the exchange of paper documents, increasing operational expenses and credit risk. Additionally, laws vary from jurisdiction to jurisdiction, often resulting in convoluted and ambiguous procedures. By connecting digital islands, a strengthened global trade finance ecosystem may be able to address these issues. An “interoperability layer” that enables ubiquitous access across networks and platforms is essential to achieving this ambition. Network interoperability allows companies to use trade finance as a native component of their own supply chain platform, instead of viewing it as a service provided by a separate banking network.
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TRADE FINANCE MARKET SHARE ANALYSIS
By type, letters of credit held the largest market share at around 39%.
According to regions, Europe is expected to experience the fastest growth throughout the forecast period. This is due to the engagement of Export Credit Agencies (ECAs), which facilitate global trade, reinforce government policy and conduct foreign trade.
Market by region
North America
Europe
Asia Pacific
Latin America
Middle East and Africa
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Key players
BNP Paribas
bank of china
Citigroup Inc.
Exim Bank of China
ICCB
JPMorgan Chase & Co
Mizuho Financial Group
Standard charter
MUFG
Sumitomo Mitsui Banking Corporation
Agricultural credit
Commerzbank
HSBC
Bank of Riyadh
Saudi British Bank
ANZ
EBRD
Exim Bank of Japan
Saudi Fransi Bank
Afreximbank
Al-Ahli Bank
Export-Import Bank of India
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