The Role of Commercial Banks in International Trade: Ethiopian Perspective
No Thumbnail Available
Date
2024-05-19
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
A.A.U
Abstract
Commercial banks play critical roles in facilitating international trade services. The mainobjective of the study is to examine the role of commercial banks in the international trade practicein Ethiopia. Specifically, the study focused on examining role of supporting government-led tradefacilitation initiatives, provision of finance services, mitigating risks related to international tradetransactions, and capacity-building efforts undertaken by commercial banks. The researcher useda mixed research approach and a descriptive research design to achieve these goals. For thestudy, both primary and secondary sources and data types were used. In order to gather primarydata, self-administered survey questionnaires and semi-structured interviews were used.Secondary data was also gathered through document analysis. Version 27 of SPSS was used toevaluate the data that were gathered. The study’s conclusions show that the state of internationaltrade service practices as of right now in the country is found at unsatisfactory level wherecommercial banks’ roles are paramount in improving the status. Commercial banks are playingdecisive roles in mitigating risks related to international trade and facilitating internationalpayments. However, the trade financing and capacity building role of commercial banks to theirinternational trade customers and businesses are not found at the expected level to successfullysupport the international trade of the country. In addition, the role of supporting government-ledtrade facilitation initiatives is also at an inadequate level. Based on the findings, the studyrecommends that commercial banks and other concerned bodies shall improve the ineffectivestatus of international trade service practice by working on foreign currency allocation problemand limitation in trade facilitation services, addressing challenges related to financinginternational trade in the way that they contribute to the growth and development of internationaltrade, implementing effective capacity building measures that can contribute to the overall growthand development of the international trade in the country, and work in close collaboration withother government entities/organs in the way that support government-led trade facilitationinitiatives.
Keywords: Commercial banks, Ethiopia, International trade, Role