Assessment on the Determining Factors of Letters of Credit Effectiveness: Perception Survey on Trade Services and International Banking Staffs of Commercial Bank of Ethiopia (CBE)

Girma, Banchalem (2017) Assessment on the Determining Factors of Letters of Credit Effectiveness: Perception Survey on Trade Services and International Banking Staffs of Commercial Bank of Ethiopia (CBE). Masters thesis, Addis Ababa University.

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Abstract

Letter of credit has become widely used in international trade as the payment instrument. Letter of credit is the life-blood of international commerce. This study aimed to assess the determining factors of letters of credit effectiveness in the process of import and export practices of CBE. Employing content analysis, this study found that 35% of trade documents contained discrepancies and did not comply with terms and conditions of letter of credit, 53% of documents contained discrepancies and did not comply with the ambiguity of context of the Uniform Customs and Practice 600 and only 12 % of discrepancy of trade finance documents originated from clerical errors. The correlation relation test showed that formation place r (90) =.680, p<.01, place of payment r (90) =.667, p<.01, language and currency r (90) =.728 p<.01and documentary condition r (90) =.684, p<.01 had statistically significant relationship with LC effectiveness. To this end, with the support of multivariate analysis, result showed that formation place (0.00010), place of payment (0.00005), language and currency (0.00002), and documentary condition (0.00003) statistically affects LC effectiveness. Banks that facilitate international trade as a major financial institution in goods and service including payment processing for merchandise shipped and services rendered, layouts funds for buyer and seller, and give professional advices to traders specially accurately rendering foreign banking services to facilitate the country's international trade.

Item Type:	Thesis (Masters)
Subjects:	H Social Sciences > HF Commerce H Social Sciences > HG Finance
Divisions:	Africana
Depositing User:	Tim Khabala
Date Deposited:	28 Jun 2018 09:15
Last Modified:	28 Jun 2018 09:15
URI:	http://thesisbank.jhia.ac.ke/id/eprint/5984

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