Where does trade volume outpace banking depth, and what is the trade-finance gap?

In 2024, the world median ratio of merchandise trade to GDP is 57% and of commercial-bank credit to GDP is 40%. The bottom-right quadrant of Figure 1 is the underserved zone: open, trade-heavy economies with shallow banking. The Asian Development Bank’s 2023 Trade Finance Gaps, Growth and Jobs Survey (ADB Brief No. 256, September 2023) puts the global trade-finance gap in 2022 at $2.50T, with rejection rates concentrated in developing-economy SMEs. This page maps where private-credit funds, development finance institutions, and factoring firms should look first.

Trade-to-credit ratio, country scatter

The x-axis is commercial-bank outstanding loans as a share of GDP (IMF Financial Access Survey, equivalent in concept to the World Bank’s FS.AST.PRVT.GD.ZS domestic credit to private sector). The y-axis is merchandise trade (exports plus imports, BACI, in current USD) divided by GDP in current USD (World Bank WDI, NY.GDP.MKTP.CD). Countries in the lower-right of the plot are where trade openness is high but bank intermediation is thin, so a rising share of each invoice travels without bank financing. Auboin (2009, WTO Staff Working Paper ERSD-2009-16) and Niepmann and Schmidt-Eisenlohr (2017, Journal of International Economics, 107: 111–126) document that bank-intermediated trade finance is concentrated in advanced economies, so the underserved zone is precisely where specialised trade-finance providers face the least competition from domestic banks.

Trade-finance gap estimate, top 20 underserved economies

The Asian Development Bank’s 2023 Trade Finance Gaps, Growth and Jobs Survey (ADB 2023, Brief No. 256) reports a global unmet trade-finance need of $2.50T in 2022, up from USD 1.7 trillion in 2020. Aggregated across surveyed banks, roughly 10% of proposed trade-finance transactions are rejected, with the rejection rate substantially higher for SMEs and for applicants in developing economies. We project that 10% coefficient onto each underserved country’s BACI-measured total trade to obtain an order-of-magnitude country-level gap. This is an upper-bound estimate in countries with deep offshore bank finance (e.g. Hong Kong trade routed through Singapore) and a lower-bound estimate in countries where the ADB survey rejection rate runs above its global average (Sub-Saharan Africa, parts of South Asia).

SME-credit share among underserved economies

The IMF Financial Access Survey reports outstanding commercial-bank loans to small and medium enterprises as a percentage of GDP, alongside total outstanding commercial-bank loans. Their ratio is the share of the loan book committed to SMEs, a proxy for how much of a country’s credit stock is reaching the firms that drive the bulk of traded-goods production (Beck, Demirguç-Kunt and Maksimovic 2005, Journal of Finance 60(1): 137–177 on SME financing constraints). Economies with a low SME-loan share and a high trade-to-GDP ratio are where working-capital demand from exporters and importers most exceeds domestic banking supply, which is the operating thesis of the ADB 2023 Survey. Displayed year is 2024, the latest FAS vintage with coverage across the underserved set.

Corridor underservice, top bilateral flows with an underserved leg

Trade finance is extended at the corridor level: a bank in Singapore finances a letter of credit for a Vietnamese exporter shipping to a Bangladeshi buyer. If either leg sits in the underserved quadrant, the corridor is a candidate for specialist intervention. We list the top-20 bilateral flows (BACI 2024, current USD) where at least one leg is an underserved economy, annotated with each leg’s credit/GDP ratio. Corridor-level gap = bilateral flow × 0.1, the same ADB rejection-rate coefficient applied in Figure 2. Head and Mayer (2014, Handbook of International Economics, vol. 4, ch. 3) formalise the corridor as the unit of analysis.

Export-partner concentration: where LC demand is most lumpy

Ahn, Amiti & Weinstein (2011, American Economic Review Papers & Proceedings101(3): 298-302) show that letter-of-credit usage rises with distance, with counterparty risk, and with the novelty of the buyer-seller relationship. Niepmann & Schmidt-Eisenlohr (2017, Journal of International Economics 107: 111-126) document the same on US bank-level data and add that when correspondent banks cut LC lines during the 2008-09 crisis, the most exposed exporters were those with the most-concentrated destination books. Partner-HHI on export shares is therefore a clean proxy for concentration risk of trade-finance demand: high HHI + underserved banking = a country where a single corridor withdrawal can collapse the trade-finance pipeline. BIS consolidated banking statistics (see Table B4, “Foreign claims of BIS reporting banks”) show the same pattern from the lender side. The bars below rank the underserved set by partner-HHI in 2024.

Correspondent-banking network around the underserved set

The Bank for International Settlements’ CPMI correspondent-banking reports (BIS-CPMI 2016, “Correspondent banking”; BIS-CPMI 2020, “New correspondent banking data”; Rice, von Peter & Boar 2020, BIS Quarterly Review) document a sharp long-run contraction in active correspondent-bank corridors: roughly a 25% decline in active relationships between 2011 and 2020, concentrated on small economies in the Caribbean, Pacific, and Sub-Saharan Africa. A correspondent-bank corridor withdrawal cuts precisely the rail that letter-of-credit and documentary-collection trade finance rides on. We do not have BIS SWIFT correspondent-relationship microdata in this workbench, so as a proxy we plot the top-20 bilateral trade corridors with at least one underserved leg (BACI 2024), on the principle that a correspondent-banking map approximately follows the merchandise- trade map (Committeri & Spadafora 2017, BIS paper 93; Head & Mayer 2014). Nodes are sized by each economy’s total trade value in the set; underserved legs are flagged in orange; edges are the BACI bilateral flows (thicker = higher flow, same corridors as Figure 4).

Export-credit-insurance capacity proxy, underserved set

The payment-terms shift: letters of credit vs open-account, 2000-2024

The most-cited long-run change in trade-finance structure is the shift out of letters of credit (LCs) into open-account payment as a share of world merchandise trade. The IMF & Bank of Korea (2009) Survey on Trade Finance established the foundational read: in the early 2000s, bank-intermediated instruments (LCs plus documentary collections) accounted for roughly 40% of trade by value; by the GFC that had fallen to the low 20s as corporates shifted to open account on the back of deepening bank relationships, credit insurance, and supply-chain-finance platforms. Subsequent ICC Trade Register reports (ICC Banking Commission, annual) and the Boston Consulting Group & SWIFT Global Trade: Securing Future Growth (2017) refine the series. The anchors below are published benchmark points from those sources; they are not a continuous survey of all banks (no such survey exists) but they bracket the direction of travel.

Are the underserved economies deepening their banking systems?

The Figure 1 cross-section is a snapshot. Whether the credit gap is widening, stable, or closing matters for the trade-finance-gap forecast: Chor & Manova (2012, Journal of International Economics 87(1): 117–133) show that credit-supply contractions in source countries depress exports of financially-dependent sectors more than the trade-credit channel alone predicts, and the symmetric implication is that credit deepening loosens that constraint over time. Below we plot the IMF FAS commercial-bank-loans-to-GDP series across the 10-year window ending in 2024 for the top-5 underserved economies by the Figure 2 gap ranking. Rising lines mean the gap should narrow organically; flat or falling lines indicate the gap is structural and waiting for external supply.

How financial-services firms use this

• Private-credit and factoring funds. Figure 2’s top-20 is the first-pass underwriting universe. Each country’s order-of-magnitude gap sets the addressable market before local-currency, regulatory, and counterparty filters.
• Development finance institutions. Figure 3 identifies where the double gap (shallow credit overall plus low SME share) justifies IFC-style Global Trade Finance Programme guarantees and second-tier bank capacity-building programmes.
• Corridor banks and supply-chain finance platforms. Figure 4 flags the highest-volume bilateral corridors where at least one leg is underserved, i.e. the pipelines where a supply-chain finance platform or a correspondent-bank facility would see the most throughput per unit of onboarding cost.

Caveats and scope

• The 10% gap coefficient is a global average from the ADB 2023 Survey. Country-level rejection rates diverge: ADB reports rejection rates above 40% for SME applicants in Sub-Saharan Africa, and below 5% in some OECD economies. Figure 2’s gap-USD should be read as an order of magnitude, not a survey-verified per-country number.
• The IMF FAS “Outstanding loans, Commercial banks” indicator is not identical to the World Bank’s FS.AST.PRVT.GD.ZS (domestic credit to private sector by banks), which also includes non-bank deposit-takers in some country definitions. The two align in levels for most economies but can diverge in dollarised banking systems.
• BACI merchandise trade does not capture services trade, where trade-finance products like export credit insurance and receivables financing are also active. The gap estimates here therefore understate demand in services-exporting economies.

References

• Ahn, J., Amiti, M., & Weinstein, D. E. (2011). “Trade Finance and the Great Trade Collapse.” American Economic Review Papers & Proceedings 101(3): 298-302.
• Asian Development Bank (2023). “2023 Trade Finance Gaps, Growth, and Jobs Survey.” ADB Brief No. 256, September 2023. Global gap USD 2.5 trillion (2022).
• Auboin, M. (2009). “Boosting the Availability of Trade Finance in the Current Crisis: Background Analysis for a Substantial G20 Package.” WTO Staff Working Paper ERSD-2009-16.
• Bank for International Settlements. Consolidated Banking Statistics, Table B4 (Foreign claims of BIS reporting banks on individual countries). Data portal bis.org/statistics.
• BIS Committee on Payments and Market Infrastructures (2016). Correspondent banking. CPMI Report No. 147.
• BIS Committee on Payments and Market Infrastructures (2020). New correspondent banking data. May 2020 update.
• Committeri, M., & Spadafora, F. (2017). “You never walk alone: explaining the persistence of private capital flows.” BIS Working Papers 93.
• Rice, T., von Peter, G., & Boar, C. (2020). “On the global retreat of correspondent banks.” BIS Quarterly Review, March 2020: 37–52.
• IMF & Bank of Korea (2009). IMF-BOK Survey on Trade Finance. Foundational survey establishing the LC share of developing-economy trade at roughly 35-40%.
• Beck, T., Demirguç-Kunt, A., & Maksimovic, V. (2005). “Financial and Legal Constraints to Growth: Does Firm Size Matter?” Journal of Finance 60(1): 137–177.
• Head, K., & Mayer, T. (2014). “Gravity Equations: Workhorse, Toolkit, and Cookbook.” In Handbook of International Economics, vol. 4, ch. 3.
• Niepmann, F., & Schmidt-Eisenlohr, T. (2017). “No Guarantees, No Trade: How Banks Affect Export Patterns.” Journal of International Economics 107: 111–126.
• International Monetary Fund (2025). Financial Access Survey, indicators “Outstanding loans, Commercial banks” and “Outstanding loans, Commercial banks, Small and medium enterprises (SMEs)”, both in percent of GDP.
• World Bank (2025). World Development Indicators. FS.AST.PRVT.GD.ZS conceptually matched against IMF FAS; NY.GDP.MKTP.CD for GDP in current USD.