Financial Guarantee Market Revenue, Insights, Overview, Outlook, Analysis | Valuates Reports

The global financial guarantee market size was valued at $28.70 billion in 2020 and is projected to reach $71.93 billion by 2030, growing at a CAGR of 9.6% from 2021 to 2030. A financial guarantee in the corporate world is a non-cancellable indemnity. This is a bond backed by an insurer or other secure financial institution. It gives investors a guarantee towards the payment of principal and interest amounts within a contract. Many insurance companies specialize in financial guarantees and similar products used by debt issuers as a way of attracting investors. Moreover, the guarantee gives investors comfort that the investment will be repaid if the securities issuer does not fulfill the contractual obligation to make timely payments.

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Financial Guarantee Market by Product Type (Bank Guarantees, Documentary Letter of Credit, Standby Letter of Credit (SBLC), Receivables Financing, and Others), Enterprise Size (Small Enterprises, Medium-sized Enterprises, and Large Enterprises), and End User (Exporters and Importers): Global Opportunity Analysis and Industry Forecast, 2021-2030

Financial guarantee helps the businesses to recover the loss owing to deferred payments from debtors. In addition, financial guarantee reduces the risk and mistrust between seller and consumer by acting as an assurer. Therefore, increasing financial risk involved in business transactions in driving the growth of the market. The financial guarantees require less documentation and therefore, processing of loan becomes easier and simple for the banks. Therefore, this is a major growth factor for the growth of the market. However, an individual with a poor credit history cannot obtain a financial guarantee for the business or other activities. Thus, strict assessment by the banks before providing financial guarantee is restraining the growth of the market. Contrarily, the automation of document verification and credibility checking procedures have increased the efficiency of the banks. Moreover, the automation of the documentation procedures has decreased loan application delays and made it more convenient for consumers. Thus, digitalization of banking procedures to obtain financial guarantee will provide various growth opportunities with technological advancements in future.

The report focuses on growth prospects, restraints, and trends of the financial guarantee market analysis. The study provides Porter's five forces analysis to understand the impact of various factors, such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers, on the financial guarantee market.

The report analyzes the profiles of key players operating in the financial guarantee market such as Asian Development Bank, BNP Paribas, Barclays, Bank of Montreal, Citibank, HSBC, ICBC, National Bank of Canada, SINOSURE and Scotia Bank. These players have adopted various strategies to increase their market penetration and strengthen their position in the financial guarantee market.
Top Impacting Factors

Rise in Import and Export Activities in Developing Countries

Consumer items, motor vehicles & components, electronic & electrical equipment, industrial machinery, industrial chemicals, and plastic & rubber products are all imported by many countries. Furthermore, numerous nations export crude oil, automobiles, and gold. These items are in high demand, and is expected to continue to this trend in the upcoming years. As a result, surge in import and export activity is expected to give lucrative opportunities for the financial guarantee sector to expand, as more buyers and sellers seek financial guarantees from banks. Thus, rise import and export activities in developing countries is expected to open new avenues for the growth of the market.

Increasing Adoption Of Financial Guarantees by SMEs

Guarantees are often charged at a low rate by banks, which is advantageous to small businesses. As a result, it enables SMEs to utilize available extra funds which further fuels the market growth. In addition, the necessity for fewer documentation for a financial guarantee has made it convenient for SMEs to get loans. Additionally, the fees charged by banks is very nominal due to which it is a cost-effective solution for the SMEs. Furthermore, financial guarantees assist SMEs in maintaining a positive credit score in order to get larger loans in the future. Hence, the adoption of financial guarantee provides several benefits to SMEs. Thus, the increasing adoption of financial guarantees by SMEs is propelling the financial guarantee market growth.

Strict Assessment by the Banks Before Providing Financial Guarantee

When a customer contacts a bank for a bank guarantee, the bank evaluates the customer's creditworthiness as well as financial health. Before issuing a guarantee, the bank conducts a thorough financial investigation of the applicant. This procedure can become rather difficult at times, resulting in either no guarantee or significant delays in obtaining a guarantee. Moreover, an individual with a poor credit history cannot obtain a financial guarantee for businesses or other activities. Thus, the strict assessment by the banks before providing financial guarantee is restraining the growth of the market.

Key Benefits for Stakeholders
• The study provides in-depth analysis of the global financial guarantee market share along with current & future trends to illustrate the imminent investment pockets.
• Information about key drivers, restrains, & opportunities and their impact analysis on the global financial guarantee market size are provided in the report.
• Porter's five forces analysis illustrates the potency of buyers and suppliers operating in the financial guarantee market forecast.
• An extensive analysis of the key segments of the industry helps to understand the global financial guarantee market trends.
• The quantitative analysis of the global financial guarantee market share from 2021 to 2030 is provided to determine the market potential.

Financial Guarantee Market Segments

Financial Guarantee Market by Product Type
• Bank Guarantees
• Documentary Letter of Credit
• Standby Letter of Credit (SBLC)
• Receivables Financing
• Others

Financial Guarantee Market by Enterprise Size
• Small Enterprises
• Medium-sized Enterprises
• Large Enterprises

Financial Guarantee Market by End User
• Exporters
• Importers

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