Traditional Culture Encyclopedia - Traditional festivals - Limitations of traditional trade finance
Limitations of traditional trade finance
Constraints in this case are credit risk, financing costs and so on.
1, credit risk: traditional trade financing usually depends on the credit ratings of the buyer and seller. A buyer or seller with a low credit rating may be denied financing by the bank or require higher interest rates and guarantees.
2. Financing costs: Traditional trade finance usually has high costs, including interest, fees and insurance costs. These costs may be unaffordable for some small businesses or businesses in developing countries.
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