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THE ROLE OF NIGERIAN MERCHANT BANK IN FINANCING INTERNATIONAL TRADE

              

ABSTRAC

The classical economics hold that trading is good and essential for every human being.  Relatively one is better of in concentrating in the production of these goods and services in which he has competitive and comparative and advantage and buy from others those goods and services which they can produce relatively more cheaply.  This is applicable to everybody and countries alike.

          Thus, through the market mechanism, in a market economy, a high level of output of goods and services is attained and shared to the benefit of all in the transaction.  As with individuals, so with nation international trade has contributed so much to the country’s infrastructure and manpower development.  Hence the need to look at merchant banks and their contributions towards financing trade in the country Nigeria is obvious.  This research work is structured into five chapters.

1. Introduction to the research.
2. Review of related literature, which focuse is on the International trade I Nigeria.  The review is categorized into ten main headings, namely population and concept.   Historical background of merchant banking in Nigeria, Development of international trade, principles of comparative cost, functions and role of merchant banks in import promotion and second-tier foreign exchange market.
3. Research methodology and design the research is main generated through secondary data collection method.  And chapter four the research findings were generated through the review of related literature and the concept considering international trade and the role of merchant bank.
4. This chapter embodies summary of finding in the research work recommendations and enhance conclusion.

 

TABLE OF CONTENTS

 

CHAPTER ONE

1. Introduction
2. Background of the study.
3. Statement of the problem
4. Objectives of the study.
5. Significant of the study
6. Scope of the study.
7. Limitation of the study.
8. Definition of the study.
9. References.

CHAPTER TWO

1. Review of related literature

2.1     Definition and concept of merchant banks (in Nigeria)

2.2     International Trade Development

1. Principles of comparatives of cost.
2. Functions of merchant banks in Nigeria
3. The benefits of International Trade
4. The roles of merchant banks in Financing International Trade.
5. Reasons for Introduction of FEM in Nigeria.
6. References.

 

CHAPTER THREE

1. Method of collecting data
2. Location f data
3. Method of research investigation
4. Tools of analysis
5. Treatment of data
6. References.

CHAPTER FOUR

1. Summary of findings and results

 

CHAPTER FIVE

1. Recommendations and conclusion.

5.1     Recommendations

5.2     Conclusions

BIBLIOGRAPHY

 

 

 

 

CHAPTER ONE

 

BACKGROUND OF THE STUDY

          The term international trade refers to a form of trading operation conducted beyond national boundaries, otherwise called import and export.  Consequently, International trade may be defined as the exchange of goods and services among the citizen of independent

Sovereign states or countries.  In Nigeria, the export growth rate has been perceived as a major obstacle to accelerated development and in order to avert this, export oriented strategies should be evolved.  The import and export sector in any economy has to be natured, projected and promoted to enhance its positive and meaningful contributions to the survival of the economic system.

          Foreign trade occurs because nations believe that there will be a gain in total productivity of factors if there is a measure of specialization by region in forms of production in which they have greater comparative advantage or least in comparative disadvantage, thus country will export those commodities in which its comparative disadvantage is the least.  Comparative disadvantage arises because of the following factors, differences in climate national resources, geographical situation and efficiency of labour.

          On the other hand, a merchant bank is any person or group of person who is engaged in wholesale banking, medium and long-term financing, debt factoring investment and unit trust management, equipment leasing and insurance and acceptance of built of exchange.  As accepting house, it accepts bull and acts as a catalyst in the trade process rather than a merchant provision of funds for trade.  The merchant banks are termed wholesale banking in the sense that deposits are usually in very large blocks, they operate from a few branches in the commercial centres of the country.

          Apart from the roles performed by the merchant banks, the central bank and the commercial banks supplement their role, the commercial banks are reported to engage in off the pegs banking retail banking because of the nature of their operations.  The central banks stand as the apex of banking system in every country, it is the government representative in the banking and financial matters and acts mainly as banker to government.  It advising the government on monetary policy implementing the policy on behalf of the government.

          In relation to international trade, the central bank determines what and how to approve in the areas within its jurisdiction, such as the payment of the visible and invisible importer and control the flow of foreign exchange earnings from exports.  The international trade is not a trade in form of exchange of goods and services with money.

          As regards international trade merchant banks have acquired a reputation for fast and efficient processing of international business transaction such as foreign exchange for both import and export, merchant banks provides services like processing of remittance, documentary draft for collection, letters of credit, project finance and handling of letters of credit.

          As seen above the indispensability of merchant banks as far as international trade is concerned can never be faulted and as such deserves a good study.  However, banks encounter difficulties while financing the trade, some of which include;

1. Unfamiliarity with the process and laws in each others country.
2. Fluctuations in foreign exchange rates.
3. Distance and time.
4. Smuggling and currency trafficking.

 

 

 

1. STATEMENT OF THE PROBLEM.

The current problem of merchant bank in financing

International trade is an attempt to identify the functions merchant banks perform in financing Nigeria foreign trade.

          The following are the statements.

1. To know the role in term of lending and borrowing.
2. To evaluate the extent of merchant banks financial involvement in financing internationals trade in Nigeria.
3. To know how banks are encouraged in playing these roles.

 

1. OBJECTIVES OF THE STUDY.

To identify the extent to which merchant banks

finances international trade and as such ensure economic growth and development in Nigeria.

          To ascertain whether Nigeria merchants banks adhere strictly to central guideline as it affects import and export measues.