FOREIGN EXCHANGE AND INTERNATIONAL TRADE ITS EFFECT ON BANK PROFITABILITY. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
ABSTRACT
This project is titled foreign exchange and international trade it’s effect on bank profitability. It examines the extent and effect of foreign presence in domestic banking markets. It investigate how net interest margins, overhead tax paid and profitability differ between foreign and domestic banks we find that foreign banks have higher profit than domestic bank in developing countries but the opposite is the case for developed countries. Estimation result suggest that an increased presence of foreign bank is association with a reduction in profitability and margins for domestic banks are regard to foreign exchange and international trade.
Foreign exchange is define by
1. Selshy gishen as: the conversion of one country’s currency into that of another in a very free economy a countr’y currency is valued according to factors of demand and supply.
2. By fortex clipart he defined foreign exchange as a system by which one currency is exchange for another to enable international transaction to take place.
3. Harper Collin he defined exchange as the system by which one currency is converted into another to enable international transaction to take place without physical transportation of good.
4. By Houghton Mifflin he defined foreign exchange as a transaction of international monetary business as between government or business of different countie, negotiable bill drawn is one country to be paid in another country.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
In recent decades, international trade in goods and financial services has become increasingly important. To facilitate such trade, many banking institution have also become international.
Foreign exchange market (currency market) is a form of exchange for the global decentralized trading of international currencies. Financial centres around the world function as auchors of trading between a wide range of different types of buyers and sellers around the clock.
The foreign exchange market determines the relative valve of different currencies.
The foreign exchange market assist international trade and investment by enabling currency conversion for example, it permits a business in Nigeria import goods from European union member states especially Eurozone members and pay Euros. Ever through its income is in Nigeria. It also support direct speculation in the valve of currencies and the carry tradE, speculation basat on the interest rate differential between two currencies.
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