Based on a survey conducted in the fourth quarter of 2012 to identify and quantify gaps in trade finance, the Asian Development Bank (ADB), in its latest brief, estimates that $1.6 trillion of demand for trade finance is unmet (Asia’s share of unmet global trade finance is $425 billion).
Furthermore, it estimates an increase of 5% in availability of trade finance could result in an increase of 2% in production and 2% more jobs. Trade finance affects trade volume, business expansion, and job creation.
For international banks, the main factors that was perceived to aggravate the trade finance gap are
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Previous dispute or unsatisfactory performance of issuing banks
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Issuing bank’s low credit ratings
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Low country credit ratings
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Basel regulatory requirements
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Issuing bank’s weak capacity
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Lack of dollar liquidity
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High transaction costs or low fee income
