Banking and Finance Project Topics

International Trade and Bank Performance

International Trade and Bank Performance

International Trade and Bank Performance



  1. To find out the performance of commercial banks in international trade in Ghana.
  2. To find out the performance of merchant banks in international trade in Ghana.
  3. To find out the performance of development banks in international trade in Ghana.
  4. And equally to find out the performance of community banks in international trade in Ghana.
  5. And equally to find out the performance of people’s banks in international trade in Ghana.



Theoretical foundation

The more perspectives we can comprehend behavior from, the more effectively we can analyze and solve problems using it (Kothari, 2004). Three key theories will form the foundation of this investigation. They are the Keynesian theory, Porter’s theory of the Diamond model, and Transaction Cost Theory. These are shown below.

Transaction Cost Theory

In his 1937 book, Ronald Coase tries to explain why businesses exist, why they grow, or why they outsource work to the outside world. The transaction cost theory postulates that businesses want to reduce the costs associated with exchanging resources with the environment as well as the administrative costs associated with internal exchanges. As a result, international merchants balance the administrative expenses of carrying out tasks internally against the costs of exchanging resources with the environment (in this case, the banks). According to the thesis, markets and institutions both have the potential to organize and coordinate economic interactions.

A corporation grows when external transaction costs are greater than internal bureaucratic costs because it can carry out its operations more affordably than if they were carried out in the market. However, the corporation shrinks and commercial banks take over the responsibilities of facilitating and promoting international trade if the administrative costs for coordinating the activity are higher than the external transaction costs.

According to Coase (1937), any business expands as long as its operations can be carried out more affordably there rather than contracting with other providers in the market. Williams (1997) asserts that when a good or service is moved across a technologically separated interface, a transaction cost takes place. Transaction costs thus appear each time a good or service is moved from one stage to another, where new technological capabilities are required to provide the good or service.

The following elements, such as environmental uncertainty, opportunism, hazards, constrained rationality, and core firm assets, may reflect the transaction costs associated with the exchange of resources with the external environment. These characteristics could raise the price of external transactions, making it more expensive for a corporation to manage them. Therefore, it might be more cost-effective to keep the work in-house so that the business won’t have to spend money on supplier contracts, meetings, oversight, etc. As a result, businesses who see environmental uncertainty as high may decide against outsourcing or exchanging resources with the bank. Therefore, the idea aids banks in determining fair prices for their services provided to businesses operating abroad, such as foreign exchange rates and fees associated with processing international payments.




Research Design

Research design refers to how data collection and analysis are structured in order to meet the research objectives through empirical evidence (Cooper and Schindler, 2006). The study adopted descriptive research design. Mugenda and Mugenda (2003) describes descriptive research design as a systematic, empirical inquiring into which the researcher does not have a direct control of independent variable as their manifestation has already occurred or because the inherently cannot be manipulated.

The study used a case study design as well in determining the strategic planning and implementation practices. Kothari (1990) describes a case study as a form of qualitative analysis that involves a careful and complete observation of a social unit. He further describes a social unit as a person, family or institution. The researcher adopted a case study because of its contribution to the knowledge of individual, group, organizational, social and political phenomena.

A Case study has been a common research strategy in business (Ghauri & Gronhaug, 2002) and community planning. The distinct need for case studies arises out of the desire of the researcher to understand the complex social phenomena. Case study method allowed the researcher to retain the holistic and meaningful characteristics of the real life events (Robert, 2002).



Demographic Factors of the Respondent

From the data collected, 6 respondents were interviewed in the department. Several demographic factors were considered which were important in the interpretation of responses given. The factors included the gender of the respondent, their highest level of education, and number of years in the organization as well as their position in this department.




This chapter presents summary, conclusion and recommendations of the study in line with the objective of the study aimed at examining the role played by Zenith bank in promoting international trade.


The objective of the study was to determine the role played by Zenith bank in promoting international trade. The study established that the various international business transactions at Zenith bank Limited included issuance of letters of credit which is done by getting collaterals and other relevant critical documentation. The letters of credit are governed by the international chamber of commerce, thus the terminologies used is similar across all banks. Other international business transactions included bank guarantees which are issued based on various bank specific conditions. The bank also offers discounting of invoices to the customers as another international business transaction to the clients.

The respondents further indicated that Zenith bank has put stringent conditions like the requirement of collaterals which may need to be relaxed to be able to remain competitive in the banking industry. The documentary collections are guided by international guidelines. The trade finance international guidelines include provision of collateral by the customers which is a major barrier to the customers. In the discounting of invoices the collateral or security requirement also affects the access of this product to the customer. However in the discounting of invoices, there are no international guidelines that govern the discounting of invoices.

5.1 Conclusion

The study concluded that the bank led to the establishment of RMA with various banks especially in China. RMA Africa is a French regulated mutual fund (Fonds Commun de Placement) issued from the partnership between RMA Asset Management and RMA Capital. The fund is mostly invested in Africa and gives investors the opportunity to benefit from the substantial potential of this market, with a firmly established local expertise. The fund’s objective over the recommended investment period, is to take profit from the dynamism of a growing continent by selecting African securities offering the greatest potential of appreciation in the medium term. The annual report released by the RMA listed Ghana at the top position up +2.54% rated the best performance. (RMA Africa, 2014).

The Bank received cash inflows as a result of international trade. Zenith bank limited generated 500 million in revenue. This has led to the growth and expansion of the bank. It has subsidiaries in Uganda, Tanzania, Rwanda, South Sudan and Democratic Republic of Congo. The increase in branch network aids in the provision of international trade finance products to new customers.

In turn it leads to increase in customer base to the bank and competition with other financial players in the industry for attractive and affordable services.


The study further concluded that international trade finance instruments offered by the bank have facilitated international business. These include: documentary collection which is a process in which the seller instructs his bank to forward documents related to the export of goods to the buyer‘s bank with a request to present these documents to the buyer for payment, indicating when and on what conditions these documents can be released to the buyer; letters of credit used in international transactions to ensure that payment will be received where the buyer and seller may not know each other and are operating in different countries; electronic funds transfer (SWIFT) that operates a global fund transfer network; bank guarantees enables the customer (debtor) to acquire goods, buy equipment, or draw down loans, and thereby expand business activity, traveller‘s checks and foreign exchange.

The study also concluded that the challenges experienced in international trade include: Knowledge gap and this can be controlled by sensitizing the customers of the products in international trade finance, security/collateral requirements, tariff barriers and substandard imports, unfair competition from other key players in the industry and fluctuations in the exchange rates.


The study concluded that international trade facilitates economic growth; improvement in infrastructure, information and communication technology, earnings in foreign exchange, increase in balance of payments, strong local and foreign currency, expansion of businesses, increased partnerships regionally and internationally. In addition, globalization which assumes similar bank transactions around the world, it enhances the domestic competitiveness of the industry in the economy, there is increase in sales and profits as in Zenith bank that received 500M, gain a global market share, reduce dependence on existing local products thus diversify focus to international products.


5.2 Recommendations for policy, theory and practice

The study recommends that bank management should review the policies guiding the provision of international trade finance products to customers with a view to making them attractive and affordable to customers.

The study also recommends that the government with the statutory arm (Central Bank of Ghana) enact policies that curb transactions on substandard imports and issue hefty penalties to non-abiding business persons.


The commercial banks in the financial sector should sensitize customers to create awareness of the international trade finance products. The study contributed to the policies development in that the emerging issues like ICT, changing international trade finance products environment due to the restructuring of the international banking industry, that affect implementation need to be incorporated in the formulation of policies in international trade finance products.

The study also identified the international trade finance products adopted by Zenith bank; essential features assumed by the bank in offering international trade finance products to customers that have made Equity gain a competitive edge in the international banking.

The strategy could be adopted by other players in the industry in their practice on their role in international trade. In addition, the study also contributed towards development of the theories on the concept of international trade. The factors that have helped shape modern day international trade include but not limited to industrialization, development of transportation, globalization and technology that enables trade and communication. It argued that the changing environment and technological advancement in the international banking necessitates review of the existing theories in the international trade.


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