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IMPACT OF COMMERCIAL BANKS ON NIGERIA’S EXPORT TRADE




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IMPACT OF COMMERCIAL BANKS ON NIGERIA’S EXPORT TRADE
ABSTRACT
This study investigates the impact of commercial bank credit (loans and advances) on the Nigerian export trade, taking into consideration the period from 1983 to 2009. After a thorough analysis it was discovered that export trade have earned some substantial amount of foreign exchange for the country, especially when it comes to oil export. This has therefore improved the Nigeria balance of payment and the level of the Nigerian economy. However, non-oil export has also contributed to their own quota as part of foreign exchange earnings, but government should make more policy to promote the growth of non-oil export in the country especially the agricultural sector and banking sector should also encourage them by granting greater percentage of credit (loans and advances) to the sector, in other for them to contribute more of foreign exchange resources and ensure slash export earnings in the country.
TABLE OF CONTENT:
CHAPTER ONE
INTRODUCTION
1.1     Background of the Study
1.2     Statement of the Research Problem
1.3     Objectives of the Study
1.4     Significance of the Study
1.5     Research Questions
1.6     Research Hypothesis
1.7     Conceptual and Operational Definition
1.8     Assumptions
1.9     Limitations of the Study
CHAPTER TWO
LITERATURE REVIEW
2.1     Sources of Literature
2.2     The Review
2.3     Summary of Literature Review
CHAPTER THREE
RESEARCH METHODOLOGY
3.1     Research Method
3.2     Research Design
3.3     Research Sample
3.4     Measuring Instrument
3.5     Data Collection
3.6     Data Analysis
3.7     Expected Result
CHAPTER FOUR
DATA ANALYSIS AND RESULTS
4.1     Data Analysis
4.2     Results
4.3     Discussion
CHAPTER FIVE
SUMMARY AND RECOMMENDATIONS
5.1     Summary
5.2     Recommendations for Further Study
Bibliography

CHAPTER ONE

1.1     INTRODUCTION
The roles of commercial banks in our modern economy cannot be over emphasized, commercial banks in Nigeria as a financial institution helps in financing the exporting sector of the economy, by lending out short-term loans to those into manufacturing, exporting, trading and industries.
Lack of bank credit (loan and advances) in our economy has brought about low rate of economic growth and diversification of most industries in Nigeria. The availability of bank credits to those in trade determines what is produced and how much of that product is produced. Therefore, commercial banks perform their important role of financial assistance by rendering important services by granting (loans and advances) to various sectors of the Nigerian economy. Commercial banks support the economy by serving the credit needs of their customary and providing a safe place for the cash balance. Of individual credit activities on the export sector of the Nigerian economy, there are general statements which guide or channel actions in decision making about the export sector advance and investment of commercial bank.
Every year, the Central Bank as part of their duty in controlling monetary policy, publish credit policy guidelines for the fiscal year.
The aspect of the guidelines that the commercial bank covered are as follows:
i.            Aggregate credit ceiling
ii.           Sectoral allocation of commercial bank activities on the export sector (loan and advances) 
iii.         Capital fund adequacy
iv.         Reserve requirement
v.          Interest rate on export sector
vi.         Commercial bank equity holding in company
The importance of export trade to economic growth cannot be overemphasized, this trade goes beyond the national boundaries of moving goods from a country to another in order to earn foreign exchange. Export are the goods and services which a country sends to other countries abroad in return for some payment made in foreign exchange.
Over the years, Nigeria has engaged herself in international trade (export trade), which is very important in earnings of foreign exchange, which helps to contribute to the growth and development of the economy. In some economy, export trade has been found to perform as the engine of growth especially through high productivity export, a nation can take advantage of international division of labour and procure desired goods and services from abroad at considerable savings in term of inputs of productivity resources, thereby helping to increase the efficiency of export industry.
A study in sub-Saharan shows that economic growth is stimulated by export trade, the federal government in 1979, created a package of incentive for the export sectors, these include directive to bank to streamline credit facilities to exporters, apart from the commercial banks granting credit to exporting sectors (oil and non-oil sector) in Nigeria, there are other institutional bodies put to engage in financing export trade in Nigeria such as Nigeria Export-Import Bank (NEXIM), Nigeria Export Promotion Council (NEPC), the Nigeria Export Processing Zone Authority (NEPZA) and others.
Commercial bank has played a very crucial role in financing the exporting sector especially the preferred sector of the economy that is non-oil export (agricultural and manufacturing) sectors.

1.2     STATEMENT OF RESEARCH PROBLEM
Export trade makes significant contributions to most economies, since credit is vital be trade, this study is designed to analyze the impact of commercial banks credit in Nigeria. Export trade provides foreign exchange for the country. However in recent years the performance of non-oil export (agricultural and manufacturing) trade has decline. This was due to exploration of crude oil, which is now Nigeria’s main source of foreign exchange.
This research is faced with the following problems which include these questions:
1.          What impact has the contribution of Commercial banks credit have on the growth and development of the Nigerian economy? 
2.          How has bank credit aided trade in the exporting sector?
3.          Has the performance accorded the non-oil export (agricultural and manufacturing) sector by way of directing the commercial bank to grant more loan to them, really boosted their output.
4.          How can bank credit be utilized by the exporting sector (oil and non-oil export trade) so as to achieve or attain desired economic development?
5.          What is the relationship between economy growth and total credits of the commercial bank on export in Nigeria between 1983 to 2009? 
1.3     OBJECTIVES OF STUDY
The essence of commercial bank credit is to give loans and advances to help investors or customers finance their project. Commercial bank credit stands to bridge the gap created by low domestic savings and income. The main objective of the study is to examine or analyze the impact of which commercial bank credit has on the Nigerian export trade. Therefore this study is thus to achieve the following objective.
1.          To examine and find out the impact of commercial bank credit on the Nigeria export trade.
2.          To examine the structure and impact of the Nigeria export trade (oil and non-oil) export sector of the economy.
1.4     HYPOTHESIS OF THE STUDY
Null Hypothesis (Ho):      The credit made by commercial banks has no significant impacts on export trade in Nigeria’ economy.

Alternative Hypothesis (H2):  The credit made by commercial banks has a significant impacts on export trade in Nigeria’ economy.  
1.5     SIGNIFICANCE OF THE STUDY
This study is relevant to the government in the sense that, it enable the government to know the necessary policy that will enhance export.
This study is also beneficial to the exporter because it will help them know how to get the necessary credit to enhance their exporting activities.
Finally, it is also relevant to the banking industry because it will enable them to know the amount of credit to channel to the exporting sector.












 

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