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Trade Finance in the 2008–09 Financial Crisis
Table 5.8 Pricing Changes by Bank Size, Q4 CY09 vs. Q4 CY08 percentage of respondents All banks
Small banks
Medium-size banks
Large banks
Letters of credit Increased No change Decreased Mean change Median change
40 36 23 6 0
47 33 20 9 0
35 55 10 –5 0
39 21 39 15 0
Export credit insurance Increased No change Decreased Mean change Median change
32 49 20 3 0
39 43 17 –13 0
24 64 12 5 0
32 39 29 11 0
Trade-related lending Increased No change Decreased Mean change Median change
47 23 31 11 0
56 15 30 25 0
41 38 21 –11 0
44 16 41 23 0
Average across products Increased No change Decreased Mean change Median change
40 36 25 6 0
47 31 22 7 0
34 52 14 –4 0
38 25 36 16 0
Source: IMF and BAFT-IFSA 2010. Note: CY = calendar year. Small banks = < $5 billion in assets; medium-size banks = $5 billion–$100 billion in assets; large banks = > $100 billion in assets. Mean figures are percentage changes in the pricing margin above bank cost of funds. Mean and median figures do not include responses for which detailed pricing data were not provided.
increased the relative competitiveness of the more conservative banks once Basel II requirements are in effect. In addition to capital requirements and banks’ costs of funds, the probability of default decreased over the course of 2009, as shown in figure 5.15. Most of the respondents indicated that there was no change in defaults. A net of only 13 percent (the difference between the percentage reporting an increase and the percentage reporting a decrease) reported an increase in default risk in 2009, against a net of 30 percent between the fourth quarter of 2007 and the fourth quarter of 2008.