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Banking Trade Finance Definition

Although international trade has been in existence for centuries, trade finance developed as a means of facilitating it further. The widespread use of trade finance is one of the factors that have contributed to the enormous growth of international trade in recent decades.

In its simplest form, trade form works by reconciling the divergent needs of an exporter and importer. While an exporter would prefer to be paid upfront by the importer for an export shipment, the risk to the importer is that the exporter may simply pocket the payment and refuse shipment. Conversely, if the exporter extends credit to the importer, the latter may refuse to make payment or delay it inordinately. The most common solution to this problem is through a letter of credit, which is opened in the exporter's name by the importer through a bank in his or her home country. The letter of credit essentially guarantees payment to the exporter by the bank issuing the letter of credit upon receipt of documentary proof that the goods have been shipped. Although this is a somewhat cumbersome process, the letter of credit system is one of the most popular trade finance mechanisms.

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Apprenticeship or entry level in Banking ?

by ThomasCrown

Hi everybody.
I wanted to get advice on something regarding the banking market. I am now studying business and economics with a goal to enter high finance; possibly investment banking/trading/venture capitalism, anywhere my skills fit in to be honest once I am done, with good returns for my efforts.
I have been stuck doing alot of restaurant wait type jobs in the recent past and I feel that this is not what I am best suited for. Don't get me wrong I can do it cause it gets me from A to B, but at the same time I need to take steps if I want to achieve my goal to get into this field

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Popular Q&A

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What is the nature of work and opportunities in trade finance of a bank..thanks?

In the imports and exports business of bank's customers. And their financing of international trade. Like the issuance of Letter of credits for their customers.

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Why trade finance is attractive to banks?

low risk,profitable,self liquidating and can cross sell

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