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THE ROLES OF BANKS IN
INTERNATIONAL TRADE
ABSTRACT
This project work has critically
highlighted the compact of the Role of Banks International Trade in Nigeria,
the problems affecting the Role in Banks in international trade in Nigeria have
been identified and how they can be controlled is also includes in the study
and ways to solve them are inductive in the study. The work is organized
into chapters to easy comprehension and deduction. Chapter one deals with the
introduction, Background, statement of problems, purpose / objective of the
study, significance of the study, limitations of the study and the definition
of terms. Chapter two involves a review of related literature, international
trade, roles, risk factor in international trade, major problems, trade
restriction major and international trade problems. This chapter also treat,
the important of international trade, and some underline issues towards the
international trade problem in Nigeria. Chapter three deals with research
design and methodology, source of data, location of data method of data collection.
Chapter four involves summary of finding where we summarize everything in this
project. Chapter five examines the lapses and recommends some viable points (s)
that can also contribute to the image of the industry.
TABLE OF CONTENTS
CHAPTER
ONE
Introduction
1.1
Background of Study
1.2
Statement of the problem
1.3
Objective of the study
1.4
Research
Questions
1.5
Assumption of the study
1.6
Scope of Study
1.7
Significance of the Study
1.8
Limitation of the study
1.9
Definition of
Terms
Reference
CHAPTER TWO
Review of Related Literature
2.2
The role of banks in international trade in Nigeria
2.1 Definition of
banks and international trade
2.2 Types of
banks
2.3
Causes and problems of banks role in international
trade
CHAPTER THREE
RESEARCH METHODOLOGY
1.0
Source of
Data
3.1 Location of
Data
3.3 Method of Data
Collection
3.4 Analysis of
Data
CHAPTER FOUR
2.0
Findings
Reference
CHAPTER FIVE
5.1
Summary
5.2
Conclusions and Recommendations
5.3
Suggestions for Further
Research
Bibliography:
CHAPTER ONE
INTRODUCTION
This project write–up, “The role of
Banks in international Trade”, is written to provide a guide sufficiently
instructive in scope to meet the need for Banks, Economist in International
Trade.
Among the important topics examined are
if there are various relationship, role that exist between banks and
international trade in Nigeria, nature of international economics,
international trade, difference between international trade and internal trade,
problems facing international trade in the banks sector.
1.1 BACKGROUND OF THE
STUDY.
Nigeria before and even since the British Colonialist of our country has been
engaged in international trade. But it was obviously spelt out during the
British Colonialist that was in the 15th century termed legitimate trade.
This was until 1960 during which
Nigeria got its independence. This means that, Nigeria was no longer controlled
solely by the dictates of the British Government Ever since then legitimate
trade to the Nigerian was changed to international trade of which Banks has a
major role to play in it.
Nigeria since the oil boom in the early
70’s has been enjoying Nigeria and across the country. Diversifying its
economy.
Apart fro international trade, and as a
result of climatic factors, Nigeria needs international trade to diversify,
accelerate its economic development in the country.
International trade ensures export
expansion and import contraction coupled with the fact that it stimulates
foreign exchange earnings, international recognition and the provision of
employment opportunities for the teeming population.
International trade is synonymous with
the production of goods and services for the benefit of trade across the
country. Thus we have the banking institution, the food processing
export/import trade and the sugar, tobacco export/import trade and that of
petroleum export trade is not left behind. Therefore, international trade or
external trade is a trade between two or more countries.
Example. Trade between Nigeria and USA
as well as Ghana, India, Britain, Japan etc. trade between two countries is
called bilateral trade, while trade between many countries is called
multilateral trade.
International trade does not mean the
exchange of goods and services within a country. The exchange of goods and
services among the people of the same country is called home or internal trade.
Example, all trading activities which take place within Nigeria in a home or
internal trade.
External trade is established for the
purpose of stabilizing nation’s economy standard if living.
External trade has been proved beyond
doubts as very important for a nation’s survival therefore it is prevent that
we explicably manifest how the role of banks can be employed for the
development of these trade. In doing this, we will limit our study to short and
long term scale institutions which are very important to the economy.
Short term scale institutions as
defined by the central bank credit guidelines is, any service enterprise whose
annual business turnover does not exceed N500,000.00 (five hundred thousand
naira).
There is no definition for long term
scale institutions as these did not attract the direct emphasis of the CBN.
The role of banks in international
trade development of Nigeria, could be seen through the various services which
these banks provide for the sustenance of international trade in the country.
These services include the provision of
capital for these exporter/importers in the business inform of loans, such as
short term loans, medium and long term loans, which the traders could use to
finance their business goals.
The banks also provide overdraft
facilities, which are necessary to finance the working capital of the business.
An overdraft could be defined as an
arrangement whereby the banks allow their customers to over-draw his account up
to a credit position at the end of the period, while short term loans refer to
loans granted for periods between one to five years. Then medium and long term
loans are granted for periods between five to ten years, even ten years
respectively.
Apart from granting loans and over
drafts facilities, there are still other roles which banks could play in
international trade development in Nigeria. These roles include professional
advice, opening of documentary letters of credit (L/CS), bills for collection
and negotiation/open account and bills of exchange, foreign exchange example
travelers cheques and foreign currencies, information on trade and exchange
restrictions, collection and transfer of funds status enquires, etc. above all
the determination of the actual external funds required by an export/import
borrower. There are accepts of such services which help international trade
growth or expansion.
It is not for fetched that the
exporters/importers of international trade suffer their own bank problems,
which should be analyzed and solved to ensure international trade development.
These problems such as the problem of corruption in banking parastatals,
obtaining capital from and operational problems which are coursed by the
dictates of the Nigeria environment and society.
The irrational problem of manpower
requirement and the poor knowledge of trade across these external traders help
to compound the general problems of international trade development of which
bank services can be gainfully employed for the purpose of solving them.
Addition to the problems is lost of
trust ship among the members or cooperators of the trade fraudulent acts among
members.
In all, these problems the worst is the
problems of unstable political contradictions.
These problems should be totally
exterminated by the government, and the society entirely to ensure the steady
growth of this important sector of the business of the economy.
It has been noticed that the level of
banks institutions financing has been vary poor compared with is obtained in
developed nations such as America (USA), Germany but few. The central bank of
Nigeria (C. B. N) should step up their moral suasion policy so as to make these
banks especially the commercial banks to increase the level of their financing
of exporter/importers members.
In increasing this level of their
financing emphasis should be placed on medium and long term loans to enable
these traders concretize their investments for better results in its outputs;
though the commercial banks borrow short from their deposits, the commercial
banks who also declare excess profits at the end of each year should expand a
lending pattern for medium and long terms loans without adversely affecting
their liquidity ratios.
With the funds available from the
banks, international traders should be made to judiciously invest them and with
other important a sound, solid firm and concrete foundation must be laid for
the international development of the country.
1.2 STATEMENT OF
PROBLEM
The Nigerian Banks is a pillar in the
roles contributed to international trade in Nigeria. The Nigerian banks have
various established institutions that enhance the growth of international
trade.
Commercial banks, merchant banks, development
banks, are one of the banks instruments that hold a vital role in external
trade and have been branched all over Nigerian states. The contribution of the
above banks to international trade has been a satisfactory type. Most importers
and exporters dances to tune of these banks.
Why have these very banks so appetizing
to the society and the world at large? Is the success as a result of the banks
efforts in it’s operations?
Why do importers/exporters prefer it to
other financing institutions?
1.3 OBJECTIVES OF THE
STUDY
1.
To find out if commercial banks play any role in international trade in
Nigeria.
2.
To find out if merchant banks play any role in international trade in Nigeria.
3.
To find out if development banks play any role in international trade in
Nigeria.
4.
To find out if commercial banks play any role in international trade.
5.
And equally to find out if people’s bank play any role in international trade
in Nigeria.
1.4 RESEARCH QUESTION
1.
What role do commercial banks play in international trade?
2.
What role do merchant banks play in international trade?
3.
What role do development banks play in international trade?
4.
What role do community banks play in international trade?
5.
What role do people’s bank play in international trade?
1.5 ASSUMPTION OF THE
STUDY
It is assumed that in this research the secondary data collected is correct and
reliable.
The procedure and method used is correct and reliable.
1.6 SCOPE OF STUDY
Area of coverage The role of banks in
international trade in Nigeria . Banks method of contribution to international
trade in Nigeria.
Why international trade in Nigeria?
Advantages of international trade in
Nigeria.
1.7 SIGNIFICANCE OF
THE STUDY
Today,
the government parastatals, banking sectors and the society are all hands on
deck to enhance the international trade development and growth of Nigerians
economy.
The research study will be of high benefit to banking sectors,
importers/exporters and to the society in general to embark of the
effectiveness of their business, which inturn will change of the society. Also
the study will determine the census and problems of banks role in international
trade in Nigeria and thereby should be taken as a corrective measure.
Through this investigation, therefore,
the banks and the society will then know their weak points and willingly adopt
measure aimed at enhancing it’s business effectiveness.
The government will be in the position
to adopt the right strategies to enable the society achieve it’s business
expectations or goals.
1.9 DEFINITION OF
TERMS.
(a) International
Trade: As described by the Author,
Norbert M Ile in his published test
“Economics of business studies” (1999, P. 278) defines an international trade
or external trade as “a trade between two or more countries; it is the exchange
of goods and services between two or more countries”.
(b) Banking
Institution: We can define a bank as
any organization that handles people’s
money. It is a dealer in debts, but indebtedness has a correlation to wealth
and hence, a bank can be described as a liquefier of wealth.
c) Role:
It is defined as “actors in a play; persons
task or duty in undertaking.
(d)
Foreign Exchange: This is a process by
which a country exchanges it’s goods/services to another country’s
goods/services.
(e) Overdraft:
This is a system whereby a customer drawns more money then he has to his credit
in a bank.
(f)
Economy:It is a system of control and
management of the money goods and other resources of a society.
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