If the U.S. state-run export lender closes, private sector trade finance might not be able to fill the gap, according to a recent MSN Money article, as the sector has not fully recovered from its financial-crisis collapse.
The Export-Import Bank is an 80-year old institution that provides support to U.S. exports. Its lending jumped 70 percent between 2008 and 2010 when the bank joined other public sector export credit agencies around the globe. The Ex-Im did this because it wanted to make up for commercial banks pulling back their loan portfolios.
However, the news source reported that conservative lawmakers are working to close the bank, because they see it as usurping the role of the private sector in providing credit.
“In the wake of the crisis, banks are wary of longer-term commitments,” Peterson Institute for International Economics senior fellow Gary Hufbauer told the news source. “Those loans are hard to get outside of the official export credit agencies, like Ex-Im.”
Additionally, research from the International Chamber of Commerce found that 30 percent of banks were lending less than before the financial crisis, while 45 percent saw a decrease of trade finance globally. However, 68 percent said that lending activity picked up in 2013.
ICC Banking Commission Chairman Vincent O’Brien wrote in the survey report that the “trade finance gap” remains a huge challenge, and that small-to-medium enterprises were going to be affected greater than other organizations.
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