Study On Trade Finance Innovation Of Commercial Bank

Three decades into its reform and opening-up policy, china has seen its import and export value increase 123 times from 20.6 billion dollars in 1978 to 2561.6 billion dollars in 2008, especially after its entry into WTO in 2001, Chinese import and export has been growing rapidly at an average annual growth rate of 26%. Under this circumstance, on the one hand, traditional international trade finance products fail to adapt to changing market, which require the international trade finance to make more progress in this respect. On the other hand, with foreign financial institutions entering into Chinese market, the competition in the financial market and among financial institutions has become more and more intense, so commercial banks also need to make innovation to adapt to the ever-changing business requirement, improve operational performance and increase earnings.Since September 2008, affected by the deteriorating financial crisis and slowdown in china's economic growth, Chinese import and export value has stepped into a downward trend, in January 2009, the import value dropped 17.5% and the export value plummeted 43%.given that Chinese economy is highly dependent on export, if we don't take measures to slow the downward trend in export, Chinese economy will inevitably be negatively affected, it is noteworthy that we can't ignore the role commercial banks can play in this process. In this paper, by making international trade finance innovation research, the author hope that more import and export enterprises can obtain credit support from commercial banks, at the same time the bank's credit risk exposure can also be reduced, so Chinese import and export can enjoy sound, stable and sustained growth.This paper contains four parts.The first chapter, the introduction, analyzes the background and meaning of making international trade finance innovation research. With china stepping up its pace in reform and opening up, import and export are skyrocketing, especially since china joined WTO, contribution degree of export to Chinese economy is becoming higher and higher, this bring new requirement of international trade finance, because the traditional international trade finance products have already been unable to adapt to market change. in addition, to increase earnings, it is urgent for commercial banks to make international trade finance innovation so as to adapt to the ever-changing business requirement.The second chapter makes a summarization and evaluation on the research of international trade finance theory, first of all, the author introduce the definition, characteristics, origin and development of international trade finance, the commonly seen international trade products and their functions, then the author elaborate on the international trade finance theory and make a summarization on financial innovation theory and risk management theory upon which this paper is based.The third chapter analyzes the existing condition of Chinese international trade finance and problems that need to be addressed. through figure comparison, the author analyze the development of Chinese import &export and international trade finance, as well as the factors affecting Chinese international trade finance innovation, then the existing problems are proposed, finally, the author further justify the necessity that Chinese commercial banks should make international trade finance innovation.The fourth chapter puts forward the design ideas of international trade finance innovation. Some important topics are discussed regarding international trade finance risk management innovation, supply chain finance innovation, bulk commodity arbitrage innovation, the role of export credit insurance and innovation on the combination of trade finance and foreign exchange trading, and the ways in which the commercial banks make international trade finance innovation are also explored.By using normative analysis and comparison analysis, this paper mainly discusses commercial banks' international trade finance innovation and its inherent risks, it attaches great importance to the combination of theory and practice, and it summarizes and analyzes some phenomenon in practice from the perspective of theory, then concludes the trend of commercial banks developing international trade finance. It also indicate that the key to developing international trade finance lies in continual innovation, at the same time, commercial banks should pay attention to the risk control and ensure the sound development of international trade finance using scientific risk management tools. In terms of developing Chinese economy, through international trade finance innovation, import and export market can be expanded and the impact of global financial crisis on Chinese import and export enterprises can be mitigated. Secondly, through international trade finance innovation, commercial banks can expand business scale, enlarge the client base, increase profitability and enhance competitiveness. Thirdly, because of innovation, the large-scale well-capitalized enterprises are provided with new way to obtain more bank line of credit so that they can expand business scale. Fourthly, the supply chain finance provide the middle and small-sized enterprises with opportunity to obtain bank line of credit so that they can win more orders with advantageous payment terms, thus, the financing bottleneck facing the middle and small-sized enterprises will be solved and they will move into the fast lane.