Blockchain for Revitalizing Trade Finance: Enhancing Governance and Minimizing Risks

Abstract

International trade thrives on the unimpeded flow of trade finance. However, trade finance in its traditional form is itself hindered by several factors, such as heavy reliance on the network of financial institutions, including trade finance organizations, banks, and syndicates of different trading nations. This makes the trade financing process complex, inefficient, unsafe, and unreliable. Against this backdrop, the present study aims to examine how blockchain-based governance can improve trade finance operations by making them not only transparent and accountable but also less risky. This study draws upon institutional theory to delve into pertinent aspects of the use of blockchain-based governance for managing trade finance. The findings are expected to reveal how inherent affordances of blockchain such as transparency can mitigate the systemic issues in the traditional approach to make trade finance more sustainable. The study’s findings are further expected to offer actionable insights for advancing theory and practice in the area.