ABSTRACT
The rate of decline in global trade during the recent global financial crisis (GFC), also known as the subprime crisis, has been more severe and more widespread than during the era of the Great Depression of the 1930s. According to the WTO, world trade declined by about 12 per cent in 2009 and greatly exceeded the estimated loss of 5.4 per cent of the world GDP for the same year (Freund, 2009; Chor and Manova, 2010; Levchenko et al., 2010). Accompanying this sharp fall in global trade, the joint IMF–Bankers’ Association for Finance and Trade (BAFT) survey further found that the decrease in the value of trade finance accelerated between October 2008 and January 2009 in almost every region of the world (BAFT, 2009). Furthermore, the World Bank estimates that 85–90 per cent of the fall in world trade since the second half of 2008 is due to falling international demand, and 10–15 per cent is attributable to a fall in the supply of trade finance (Auboin, 2009).
