The Problems of Export Letters of Credit that Face the Jordanian Banks (Field Study)

Ahmad H. Thaher, Toufiq H. Abdul Jaleel, Juma F. Humidat

Abstract


The main objective of this study is to identify the problems of export letters of credit (L/Cs) that face the Jordanian banks. Other minor objectives include testing the relationship between these problems and the size of bank (large, medium, or small) on one hand, as well as, the type of bank (Islamic /Traditional**) on the other hand.

To achieve these objectives, a questionnaire was developed and distributed to (16) banks, total of (175) questionnaires were distributed proportionally to banks' number of branches, and only (149) were returned valid for analysis. i.e. percentage of (85.1%). The necessary statistical tests were performed with (95%) confidence level. For the twenty-two initial problems of export L/Cs that were studied. Results show that the Jordanian banks face the following five problems: customers' ignorance to uniform principles and practices of L/Cs, non- availability of a complete automatic system for export L/Cs, difficulty in preparing required documents from customers, customers' lack of the English language which is the main language used in export L/Cs, and expertise errors committed in required documents for export L/Cs.

Finally, the results show significant differences among different bank sizes in these five problems, and significant differences among different types of banks in one problem only.


Keywords


Export Letter for Credit, The Jordanian Banks

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