The global trade finance gap for 2015 is estimated to have been US$1.6tn, an increase of US$200bn on the equivalent report from last year.

The latest data from the Asian Development Bank (ADB), whose research in this area is widely cited and influential, shows that US$693bn of the gap is in developing Asia, including China and India.

The Bank for International Settlements estimated in 2014 that the global market for trade finance was between US$6.5tn and US$8tn. If we err towards the more conservative end of the scale, then the ADB’s data shows that almost one-quarter of it is not being met.

While there has not been a significant increase in the amount located in emerging Asia over the past year, it still harbours a huge deficit in trade finance. It is felt more acutely among small businesses, with 56% of trade finance proposals being rejected for SMEs, compared with 34% for large corporations and 10% of multinational companies.

“Among developing regions, Asia and the Pacific continues to have both the highest proposal rate [40% of global proposals] and the highest rejection rate [34% of global rejections] for trade finance. As in previous years, this is largely driven by China. Both developing Asia and advanced Asia recorded lower rejection rates as a percent of total global rejections than in past years. However, their total proposals were also lower,” the report reads.

Last year’s report was dominated by the tethering of correspondent banking relationships, a trend related to higher regulatory costs and banks’ general refocusing on core markets and sectors, and a widespread process of de-risking. It seems that this trend has tapered off: the damage, it is likely, has already been done.

The ADB quizzed 337 banks from 114 countries, using those involved in its own trade finance programme, as well as members of the ICC’s Banking Commission. A massive 90% of those banks said that anti-money laundering and know your customer (KYC) regulations were an impediment to the expansion of trade finance.

Drilling down into the data, 43% of SMEs had their credit lines decreased as a result of banks increasing the stringency of their credit criteria: the de-risking continues, and small companies are being channelled into the informal financial system to meet their borrowing needs.

While digital solutions are still very nascent among those surveyed, their use is growing. 43% of those quizzed were aware of P2P lending platforms, with 15% utilising them. On this front, uptake is highest among African firms.

In one quirky finding, “firms in the Pacific generally do not know or use digital finance, with the exception of one firm in Micronesia that has used P2P”.

The ADB’s head of trade finance Steven Beck says that “the growth of the trade finance gap continues to be a drag on trade, and SMEs are the most affected”.

His words and the findings of the survey tally with work presented in Singapore last week by East & Partners, a banking research company. East & Partners analysed supply chains in Southeast Asia and revealed their findings at the GTR Asia Trade and Treasury Week.

They found that cross-border supply chain volumes in the region are outstripping the growth of domestic trade volumes; one in two Indonesian companies use term credit lines to finance their supply chains – higher than any other country in the region; three in 10 companies already outsource part of their supply chains, mostly to large logistics centres; while Singaporean companies use 5.5 separate financial institutions on average – much lower than the regional average of 7.3.