CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
Getting to know how banking institutions impact country’s and firms’ internationalization is a bedrock to international business. Banks stand as a significant aspect of the world transaction services organizations, which envelops crucial fascets of the institutional environment and are significant contributors to the growth and development of international business (Eriksson et al., 2017). Banks play a major role in international trade by making available trade finance products that minimize the risk of international trading (Friederike & Schmidt, 2014). Eriksson et al. (2017) opined that banks are specialists when it comes to screening and monitoring economic agents and supply firms with credit and other financial services. Banks participation in international trade is vital since they are in charge of payments and security of transactions. Domestic banks representation for home countries and firms is vital when it comes to international trade (international trade and imports). Especially in recent times, where international trade has become inexorable both for Banks play a vital role in clearing the way for international trade by making available a wide range of trade service products like letter of credits, documentary collections, consignment, advance payment, supplier’s credit to name a few. The two most familiar trade finance instruments provided by banks are letters of credit and documentary collections Nigerians banks have always played a major position in the country’s economy. They play a decisive role in the development and growth of the industry and trade. The monetary and banking system which lay the foundations of relationship among the suppliers and receivers of funds further the growth of the real economy. Despite the fact that the traditional banks take up this task all over the world, it is very paramount to take the domestic participating financial system and to make sure that the real sector benefits from these funds (Cansu et al, 2019).
Numerous researchers have ventured into enhancing Nigerian financial service system, banking service qualities and monetary policies to enhance these banks. Howbeit, minimum attention has been channeled to contributions of banks in Nigeria towards international trade. This study aims to examine the role of commercial banks in facilitating international trade in Nigeria (a case study of UBA accra).
1.1 STATEMENTS OF PROBLEMS
It is distressing that irrespective of their numerous funding mechanism and incentives put in place by commercial banks to invigorate the growth of international trade in relative contribution to the economy is still very low due to this low rectum, commercial banks encounter the risk of non-payment of loan and advance given to international trade. In the first place, the challenges of policy stability, it is of no need to map out a beautiful policy on international trade only to be stopped, quite soon, example the re-introduction of regulatory guideline in domilarily account was discentives to the international trader. This was altered later by central bank of Nigeria (CBN) circulated in September. After much pressure recently Nigeria international trade and import only provide fund and transfer the risk to other banks. Another challenge is that Nigeria international traders who delve into foreign market do not make themselves available with the information that has to do with import countries such as culture, regulation and wealth this result in low returns those by increase the risk being faced by the commercial banks that finances them. The Nigeria through the numerous activities of some of its citizen has activities of some of its citizen has yielded a negative business image both at home and abroad the poor isn’t excluded. Accommodation for a period of 3 days to 50 days, while long term credit usually related to a period of more than 5 years. The international traders need pre-shipment finance for security the raw material and other input required for the implementation of an international trade also ranging from the shipment of goods to foreign countries the credit is for this reason regarded as a loan granted to finance goods on the bases of
1. Letter of credit open in favour of international trader by overseas. Imports bank.
2. Insurance of ware House Company.
The timeframe of such credit made available by the past does not usually exceed 12 days’ post shipment credit is a loan or advance granted or any other type of credit, provided by the bank to an international trader of goods from the date of international trade proceeds within today. The main types of advance for post shipment are negotiated form of international trade bill drawn with confound international trade contract will order. The Nigeria international trade and import bank (NEXIM) makes available both long and short term credit via commercial and merchant bank to support international trade from non-oil product a. Advance fee fund syndromes popularly called 419 b, Cheating c. Supplying of poor quality product d. Manipulation of words and document The practice sign through illegal international trade of goods specially to neighboring west African Countries which cannot be over worked as an in habited factor. Taking into consideration of their problems counters in financing international trade.
1.2 PURPOSE OF THE STUDIES
The study will focus on analyzing the role of commercial banks in facilitating international trade in Nigeria (a case study of UBA accra)
The specific objectives of the research work are as follows:
i. To study the modalities adopted by export that need international assessing.
ii. To determine the economy polices finance and their effectiveness on the international trade.
iii To ascertain the problems encountered by the financial institutions in export production finance.
iv. To examine the prospective of international trade financing in Nigeria.
vi. To ascertain the extent to which oriented industries benefited from international trade financing.
1.3 RESEARCH QUESTIONS
i. What are the modalities adopted by export that need international assessing?
ii. What are the economy polices finance and their effectiveness on the international trade?
iii what are the problems encountered by the financial institutions in export production finance?
iv. what is the prospective of international trade financing in Nigeria?
vi. what is the extent to which oriented industries benefited from international trade financing?
1.4 HYPOTHESIS
HO1: commercial banks in international trade in Nigeria does not encounter Problems.
HO2: International trade oriented commercial banks has not affected financial industries to an extent.
1.4 SIGNIFCANCE OF THE STUDY
The research work on the role of commercial banks in facilitating international trade in Nigeria (a case study of UBA accra) will be beneficial to the Nigeria economy in the following ways.
1. GENERAL ECONOMY: It will help the nation in devising the foreign exchange and revenue of the nation as well as receiving pressure on the balance of payment
2. MANUFACURERS: With the introduction of the structural adjustment program (SAP) in 1986, many manufacturers have been oriented into the system and hopefully manufactures export good with the financial institutions incentives will improve the production potentials as well as production producing large qualities of export purpose.
3. EXPORTERS: The financing of export will go a large way in helping Nigeria exports to compete favorably with the international world.
4. STUDENTS: This research work will be valuable to the students who may carry out the similar research work in related field for reference purposes.
5. FINANCIAL INSTITUTIONS: The research work will work into the problems and the prospect of institution the export finance and the recommended ways to improve on it.
1.6 SCOPE OF THE STUDY
The scope of the study is very wide it focuses on the role of commercial banks in facilitating international trade in Nigeria (a case study of UBA accra). As a result of this, the researcher has consulted with several reviews on the issues of the role of commercial banks in facilitating international trade in Nigeria which are appreciated for employees at a particular point in time. It also serves as a useful guide to organizations. In their future decision making process on training related issues, knowledge of private sectors. The respondents for the study will be limited to UBA staff accra Ghana)
1.7 LIMITATION OF THE STUDY
For the nature of the research work the researches Intended to limit its work because of the time of this research work the economics of the nation is also battered that the research cannot afford to visit all the financial institution and has a limited time.
ii. TIME FACTOR: The research has witnessed some months’ duration in season. However, the researcher was able to utilize the available period
iii. WORK LOAD: The department worked load is numerous for the research work coupled with the fact that the researcher must attend lectures there by prevent a through and intensive work.
