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 CONTENTS
1.2Statement of Research Problem
1.3Objectives of Study
1.4Hypothesis of the Study
1.5Significance of the
1.6Limitation of the
1.8Organization of the
CHAPTER TWO: LITERATURE REVIEW
2.2Commercial Bank Credit
2.3Commercial Bank Instrument of Credit
2.4Lending Principles and Policies of Commercial
2.5Factor that Affect Commercial Bank Credit to
2.6The Need for International Trade
2.7Brief Survey of Development of Export Credit
2.8The Concept of Export Promotion and Economic
2.9How Bank Credit is Going to Export
2.10The Contribution of Banks to Nigeria Export
CHAPTER THREE: THEORETICAL FRAMEWORK AND
3.2 Factors that Determine the Volume of Export Trade
3.3 Model Specification
CHAPTER FOUR: PRESENTATION AND
INTERPRETATION OF REGRESSION RESULT
4.1 Presentation of Regression Results
4.2 Interpretation of Table
4.3 Policy Implication
CHAPTER FIVE: SUMMARY,
CONCLUSION AND RECOMMENDATION
5.1Summary of Findings
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
i.Aggregate credit ceiling
ii.Sectoral allocation of commercial bank
activities on the export sector (loan and advances)
iii.Capital fund adequacy
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.
1.2STATEMENT 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
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
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
5.What is the relationship between economy growth
and total credits of the commercial bank on export in Nigeria between 1983 to
1.3OBJECTIVES 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.
1.4HYPOTHESIS OF THE STUDY
Null Hypothesis (Ho): The
credit made by commercial banks has no significant impacts on export trade in
Alternative Hypothesis (H2): The
credit made by commercial banks has a significant impacts on export trade in
1.5SIGNIFICANCE 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
1.6METHODOLOGY OF RESEARCH
This work will be carried out through theoretical analysis of
statistical data, econometric model using the following
i.Single regression analysis form involving
ii.The T-test which is used to test the level of
significance of correlation coefficient.
The study is also carried out using secondary data. The major
source of secondary data to be used are journal, financial newspaper, magazine,
Federal Office of Statistics, various business and bank journals and also text
1.7ORGANIZATION OF THE STUDY
This study consist of five chapters, chapter one focuses on the
general introduction to the study, chapter two is basically on the literature
review, chapter three focuses on the methodology, i.e. specification of model,
chapter four deals with data presentation and interpretation of regression
result, while chapter five focuses on the recommendation, summary and conclusion.
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