how do banks help in trade
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Answer:
Lending lines of credit can be issued by banks to help both importers and exporters. Letters of credit reduce the risk associated with global trade since the buyer's bank guarantees payment to the seller for the goods shipped. ... Export credit or working capital can be supplied to exporters.
Banks are important facilitators of international trade. Besides providing liquidity they guarantee payment for around a fifth of world trade. The banking sector thus plays an important role in international business. Today, almost all Banks have formed collaborative alliances and established correspondent banking relationships with Banks in other countries to better serve their international business community. Banks play a key role in forming a bond of trust between buying and selling agents executing transactions in international markets. Local Banks have intermediary Banks outside the country, which assist in effecting international payments hence the receipt and payment for goods and services by local people.
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