Letters Of Credit For Trade Financing Project Risk Management

In the international trade, payment by L/C is to use more and more, this kind of payment in the international trade plays an important role. Whether in developed or developing countries, international trade settlement occupies a large proportion by letter of credit, in our country, the import and export trade settlement way above 40% by L/C. The L/C has unique legal nature, when it opened, it become independent of trade contract, in credit transactions, the issuing bank to be prompted to conform with the documents and the L/C as the ultimate basis for payment responsibility. Because of the unique attributes the L/C has financing function. L/C trade financing function is an important business in the bank, it can bring high profits, however, due to its own international and uncertainty, it will bring greater risk for bank also. L/C trade financing is the program for international trade services, the development of international trade request credit trade financing project risk management continuously of development and perfection, credit trade financing project risk management in international trade play more and more important role. L/C trade financing project risk management is not only the main issues facing Banks, but also how effective and safe use enterprise financial resources, and improve their own competitiveness in the international market a key ring. Yet for credit risk management of trade financing, mostly stood in the part of international trade course, from the direction of a single comparison one-sided talked. Few using principles of management, the credit financing trade as a whole project, carry on comprehensive risk management research.This paper based on L/C trade financing project risk management, the importance of the project risk management from management, based on the theory of related credit financing project life cycle perspectives, will all phases of credit financing were introduced in detail, according to the characteristics of the Banks in China, analyzes the L/C trade financing mode, present situation and the existing problems of theoretical analysis and empirical analysis, and emphatically analyzes the combination of L/C trade financing risk identification and evaluation are presented, and the risk of L/C project financing strategies, theoretically, law, practice classy and actuators, credit and the financing way of full in-depth research, help Banks more effectively develop financing businesses, preventing financing risk, and make it become China's import and export trade powerful support, to adapt to the current economic development needs, thereby better promote our country's credit financing trade development.