Nearly 50 per cent of respondents to the International Chamber of Commerce's (ICC's) recently released Global Survey report said they had seen a decrease in commercial letter of credit (L/C) business.

The survey also indicates that more than half of all applications for trade finance by small- and medium-sized enterprises (SMEs) are rejected.

Decreases

In this year's Global Survey report, 31.45 per cent of respondents reported a slight decrease in commercial L/C business while 16.94 per cent reported a significant decrease.

Nearly 35 per cent of respondents reported an increase in supply chain finance deals, which according to the report suggests a decrease in the use of traditional trade finance is evident.

SME rejections

The survey, which received 357 responses from 109 countries worldwide, found that 60 per cent of SME applications for trade finance were rejected.

It also found that SMEs alongside African countries are suffering the most from a deepening global trade finance gap.

Compliance difficulties

Compliance is one of the main impediments to trade finance provision according to the survey.

As a result of concerns over compliance, the report says that a growing number of banks are concerned about their continuing ability to finance global trade

Only 52 per cent of respondents reported an increase in trade finance activity, compared to 63 per cent in 2015 and 80 per cent in 2012.

The ICC Global Survey can be downloaded from here.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.