Blockchain technologies and trust formation in trade finance
1University of Oulu, Oulu Business School, Department of Management and International Business, International Business
|Online Access:||PDF Full Text (PDF, 0.8 MB)|
|Persistent link:|| http://urn.fi/URN:NBN:fi:oulu-201806062475
|Publish Date:|| 2018-06-06
|Thesis type:||Master's thesis
This thesis focuses on distributed ledger technologies, commonly known as blockchain technologies. In this study, blockchain technology is seen as an innovation that will change how trade finance industry will function in the future. In general, trade finance industry is based on risk mitigation, and this thesis studies how the implementation of a trust-free blockchain technology will affect how this industry operates.
The study aims at understanding the effect of blockchain technology being implemented into the trade finance industry. In general, blockchain technology affects both, trade finance operations and how trust formation between the trade partners. This study combines model of diffusion innovation by Rogers (2003) and trust categorization of Jøsang et al. (2005). These models formulate the theoretical framework for the research.
The nature of this study is qualitative research, which utilizes abductive reasoning, and has both theoretical and empirical part. Theoretical part consists of three chapters, focusing on the basics of blockchain technology, trade finance industry and the concept of trust. Empirical part is based on documentary data and semi-structured interviews of blockchain and trade finance professionals.
Results show that trade finance, which is based on risk mitigation of international trade is slowly progressive, manually handled and paper-based process which has not been able to grasp the potential of automation advances made in other financial sectors. Trust between trading partners has previously been based on context-dependent trust, but the there is a shift towards more context-independent trust that is based on algorithms and ratings. Blockchain technology is based on immutable ledger technology and thus possesses the capability to change how trade finance functions.
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