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Blockchain in trade finance: The Good, the Bad and the Verdict

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  • Tarik Kellaf

Abstract

This study explores the potential of blockchain technology to optimize trade finance processes and to address inefficiencies and fraud risks in centralized systems that contribute to a growing global trade finance gap, particularly affecting SMEs. Through documentary analysis and the case of Morocco's OCP Group, with insights for practitioners, we explore the benefits and challenges of integrating blockchain into trade finance. Our findings suggest a hybrid solution integrating blockchain into existing infrastructure, relying on both off-chain and on-chain governance mechanisms in smart contracts. This approach aims to bridge the gap between traditional and blockchain solutions in trade finance and discusses the potential for a more pragmatic way forward for the industry.

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  • Tarik Kellaf, 2024. "Blockchain in trade finance: The Good, the Bad and the Verdict," Modern Finance, Modern Finance Institute, vol. 2(2), pages 136-160.
    • Handle: RePEc:bdy:modfin:v:2:y:2024:i:2:p:136-160:id:206
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    References listed on IDEAS

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    1. Marjaneh Jahangiri Lahkani & Shouyang Wang & Mariusz Urbański & Mariya Egorova, 2020. "Sustainable B2B E-Commerce and Blockchain-Based Supply Chain Finance," Sustainability, MDPI, vol. 12(10), pages 1-14, May.
    2. Erik Hofmann & Oliver Belin, 2011. "Supply Chain Finance Solutions," SpringerBriefs in Business, Springer, number 978-3-642-17566-4, March.
    3. A.V. Bogucharskov & I.E. Pokamestov & K.R. Adamova & Zh.N. Tropina, 2018. "Adoption of Blockchain Technology in Trade Finance Process," Journal of Reviews on Global Economics, Lifescience Global, vol. 7, pages 510-515.
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