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EVALUATION OF PROBLEMS AND PROSPECTS OF DEBTS SETTLEMENT IN INTERNATION TRADE

(Accounting)

EVALUATION OF PROBLEMS AND PROSPECTS OF DEBTS SETTLEMENT IN INTERNATION TRADE

ABSTRACT

            This topic that is being treated (Evaluation of problem and prospects of debt settlement in international trade is very important to our present economic condition if people will blend with the results and findings of this research work.In the chapters of this project, it is clear that Evaluation of problem and prospects of debt settlement in International Trade is very important in trade between one country and another.  This is because if there is no existence of international trade, there will be any debt settlement.The debt settlement in international trade brings importer and exporter together in business transaction order to minimize profit.  Importer is he one who orders for the goods while exporter is the one who supply the goods. The view of other importers/exporters about the topic were also examined.  Evaluation of problem and prospects of debt settlement in international trade is a vast topic, which has been death with by many professionals in different field and vacations.  Thus work of importer is to order for goods while exporter is to supply the goods to the importer.

TABLE OF CONTENTS

CHAPTER ONE

1.0              INTRODUCTION

1.1    BACKGROUND OF STUDY

1.2              STATEMENT OF PROBLEMS

1.3              OBJECTIVE OF STUDY

1.4              RESEARCH QUESTIONS

1.5              SCOPE, LIMITATIONS AND DELIMICATIONS

1.6              DEFINITION OF TERMS

CHAPTER TWO

2.0              REVIEW OF RELATED LITERATURE

2.1    INSTRUMENTS USED IN FUNDS TRANSFER

2.2              PROCEDURE FOR SETTLEMENT OF DEBT

2.3              ESTALISHMENT OF ACCOUNTS THAT AID DEBT SETTLEMENT

2.4              PROBLEMS ENCOUNTERED IN DEBT SETTLEMENT

2.5              PROSPECTS ENJOYED IN DEBT SETTLEMENT

CHAPTER THREE

3.0              FINDINGS

3.1    RECOMMENDATIONS

3.2              CONCLUSION

3.3              REFERENCES/BIBLIOGRAPHY

CHAPTER ONE

1.0              INTRODUCTION

Considering the fact that no nation is endowed with all the natural

resources she needs for the production of goods and services, while some other nations were endowed with various types of natural resources.  Therefore, there is the need to concentrate on the production of goods and services they have comparative cost advantage and exchange it with other countries.  The effect of this exchange of goods and services between countries is called international trade.  When there is a trade between two countries payment must be made which brings to settlement of debt.

            International trade as defined by (ORTIH 1998) is a trade arrangement involving exchange of good and services between a particular nation and other nations of the world.  The importers and the exporters are brought together in the process while the importers make payment, the exporter receive payment.

1.1       BACKGROUND OF STUDY

            No country in the world is self-sufficient because natural and human resources are unevenly distributed.  Nigeria is blessed with Crude oil, Zambia is richly endowed with Coppa while United State of America and most West European Countries has abundant capital, technical know-how and skilled manpower.  Hence for a country to get the commodities she is not endowed with she must trade with other countries that have the (EWA and AGU 1989) and if this is the case money must be exchanged ordinary, exporters would most probably prefer to be paid in their local currency, while importers will prefer to pay in their local currency as well this implies that both of them wants to avoid a some exchange rate risk.  In this effect, the devices for funds transfer and methods of debt settlement will be discussed in the research work with particular reference to the problem and prospects encountered in debt settlement in international trade.  This would will be based on the theory of computation cost advantage as propound by David Richards.

            Nevertheless, the parties involved in international trade will agree from the outset, on the terms as well as the method of payment (ODOH 1997) in his work opined that the term and method very, depending on the transactions the integrity and financial standing of the parties involved.

1.2              STATEMENT OF PROBLEM

Exchange of goods and services did not just start today yet both parties involved want to make or receive payments in their local currency to avoid exchange risk, even when the remittance of fund is done through international network of correspondent bank system with the use of specific devices to give effect to the transfer.  The question therefore is what is the brain behind this behavior?  In the light of the foregoing, the researcher want to find out the problems if any and prospects encountered in debt settlement in international trade.  At the same times evaluate the risks and their causes as well as the possible ways of solving them.  This work will also want to examine the influence of the problems involved in debt settlement on the balance of payment problems.  Based on these, the researcher want to identify the problems and prospects of debt settlement in international trade, which has hitherto being a problem for most countries, which made researcher to become interested in the project topic so as to come up with recommendations that improve debt settlement procedure.

1.3              OBJECTIVES OF STUDY

The aim of this research work is to evaluate the problems and prospect

of debt settlement in international trade.  It will also examine the procedures involved in remitted funds.  Therefore the objectives of this work will be summarized as follows:

1.                  To determine the procedures for settling debt in international trade.

2.                  To examine the various account and devices that aid debt settlement in international trade.

3.                  To evaluation the problems and prospect inherent in the methods of remitting fund in international trade.

4.                  To make recommendation on the most effective means of settling debt in international trade.

1.4              RESEARCH QUESTIONS

These are the purpose of the study that is translated into questions of

Which when answered will provide a detailed solution to the problem of study.  The following questions will be asked and answered in pursuant of the objective.

1.                  Do the procedures adopted for debt settlement have any significant influence on its problem and prospects.

2.                  What are he implication of various accounts and devices that aid debt settlement.

3.                  Is there any problem and prospect encountered and enjoyed in debt settlement in international trade.

1.5              SIGNIFICANCE OF STUDY

This research work, when concluded will be of great importance to the

Following interest groups.

1.                  GOVERNMENT:  For the fact that exchange rate is involved government will want to project her nation interest.

2.                  THE EXPORTERS:  They are interested a sound, effective and efficient means of settlement will guarantee their money.

3.                  THE IMPORTER:  They want to be very sure that the goods they ordered get to them and on time without problem.

4.                  THE BANK:  They serve as an intermediary through which funds are remitted.

5.                  RESEARCH STUDENT AND PUBLIC:  Are interested in one way or the other because it will make further research on related topic easier and potential importers and exporters will be guarantee of the business safety.

1.6              SCOPE

The scope of this work will cover the debt settlement procedure

Adopted by Nigeria Importers and Exporters.  The problem and prospect they reap with each of the method of remittance.

1.7              DEFINITION OF TERMS

i.                    CREDIT RISK:  This is risk in which the exporter is not being paid by the importer after the has fulfilled his obligations of the contract due to insolvency of the importer.

ii.                  FOREIGN EXCHANGE:  These are currencies of other countries, which are usually acceptable internationally for the purpose of settling transactions and maintaining international liquidity among different countries of the world.

iii.                EXCHANGE RATE:  This is the rate at which one currency is exchange for another or the price of one currency in terms of another currency.

iv.                TELEGRAPHIC TRANSFER (TT) It is the transfer of money by cable telegraphic medium from a bank account in a country to a beneficiary in another country.

v.                  EXCHANGE RISK:  This is the risk arising from inflation in the exchange rate, which affect international payment system.

vi.                SWIFT:  Society for world wide inter-bank financial telecommunication.  It is a means by which bank could give instruction for financial transactions among themselves, using a secure, standardized, audible and rapid system.

vii.              VOSTRO ACCOUNT:  Account of foreign bank in Nigeria.

viii.            NOSTRO ACCOUNT:  This is foreign currency account in foreign bank maintained by Nigeria banks.

ix.                MAIL TRANSFER (MT):  This is the transfer of money by mail from a bank account in one country to a beneficiary in another country.

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