International Business Development Financing Flashcards
1
Q
What is Trade Finance?
A
- financing of international trade flows
- bringing mitigants
- allowing business partners who don’t know each other to make the deal
- provides assurance for buyer and seller to make the trade happen
2
Q
What are the elements of Trade Financing according to Basle III?
A
- financing connected to the exchange of goods and services
- financial products with fixed short-term maturity
- no automatic rollover
- requiring satisfactory supporting transactional documentation
3
Q
What is the difference between secured and unsecured deals?
A
unsecured (Open Account Deals, around 80%):
- there has to be full trust between the buyer and the seller
- no committment or mitigants by banks
- buyer and/or seller take all risks
secured:
- banks provide their committment
4
Q
What types of trade finance products are there?
A
- international guarantees
- stand-by letter of credit
- documentary collection
- documentary credits
- structured financing trade reated
- supply chain finance
5
Q
What types of trade finance products are there?
A
- international guarantees
- stand-by letter of credit
- documentary collection
- documentary credits
- structured financing trade reated
- supply chain finance
6
Q
Which environmental factors influence trade and trade finance?
A
- slow-down of global trade growth
- protectionist measures
- economic, financial, political crisis
- regulations
- Basel III and IV: requirements make loans more expensive; compliance constraints
- peak: 18,1 trillion USD 2014 and 2018
7
Q
When does it make sense to use Open Account Transactions?
A
- when the deal is not significant
- when the deal is made by two companies within the same Holding
8
Q
When does it make sense to use Open Account Transactions?
A
- when the deal is not significant
- when the deal is made by two companies within the same Holding
9
Q
What is a credit line?
A
- Obergrenze bis zu der Kreditnehmer eine bestimmte Kreditart in Anspruch nehmen darf
- revolvierend
- Gegensatz: Darlehen
- dienen der Liquiditätssicherung des Kreditnehmers
10
Q
What risks are there in international trade?
A
- commercial risk of seller/exporter
- production risk
- country risk
- monetary risk
- exchange rate risk
- commercial risk of buyer/ importer
- non-delivery risk
