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Trade and Trade Finance in the 2008-09 Financial Crisis

Author

Listed:
  • Mr. Thomas William Dorsey
  • Mika Saito
  • Armine Khachatryan
  • Ms. Irena Asmundson
  • Ioana Niculcea

Abstract

Global merchandise trade sharply declined in late 2008 and early 2009, and some press and financial market reports assigned a large role for the decline to trade finance. However, the available evidence suggests that shocks to trade finance were not the major factor in the decline in trade. Surveys of commercial banks by the IMF and others found that while bank-intermediated trade finance fell in value during the crisis, it fell by less than merchandise trade. As a result, the share of world trade supported by bank-intermediated trade finance increased despite higher pricing margins. Other explanations appear to account for the bulk of the reduction in international trade.

Suggested Citation

  • Mr. Thomas William Dorsey & Mika Saito & Armine Khachatryan & Ms. Irena Asmundson & Ioana Niculcea, 2011. "Trade and Trade Finance in the 2008-09 Financial Crisis," IMF Working Papers 2011/016, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2011/016
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    References listed on IDEAS

    as
    1. Love, Inessa & Preve, Lorenzo A. & Sarria-Allende, Virginia, 2007. "Trade credit and bank credit: Evidence from recent financial crises," Journal of Financial Economics, Elsevier, vol. 83(2), pages 453-469, February.
    2. Andrei A. Levchenko & Logan Lewis & Linda L. Tesar, 2009. "The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun," Working Papers 592, Research Seminar in International Economics, University of Michigan.
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