Islamic University – Gaza
Faculty of Commerce
Department of Accounting
The Letter of Credit Problems that Influences
the Palestinian Importer in Gaza Strip
By:
Anas Rashed
120091982
Bilal Al-Muhtadi
120091094
Amjad Jaber
120091426
Supervisor:
Dr. Salah Shubair
Supplementary Requirement To Obtain The Bachelor Degree In
Accounting ( English Department)
June, 2012
Acknowledgement
We dedicate our research to our happy home, Palestine
To our outstanding cherish able and land, Gaza
To all whom support Palestinian people
To our families and parents whom have been there for us,
since we came to this world
To ourselves, giving us the support and continuity
To anyone gave us an advised
And to everyone, we dedicate our work.
Anas, Bilal, Amjad
I
Table of Contents
Acknowledgement .......................................................................................................... I
Table of Content ............................................................................................................ II
List of Tables.................................................................................................................. V
List of Figures ............................................................................................................. VII
English Abstract ....................................................................................................... VIII
Arabic Abstract ........................................................................................................... IX
Chapter 1: Research Proposal
1.1 Introduction .......................................................................................................... 1
1.2 Research Problem ................................................................................................. 1
1.3 Research Objectives ............................................................................................. 2
1.4 Research Importance ........................................................................................... 2
1.5 Research Limits .................................................................................................... 3
1.6 Research Hypothesis ............................................................................................. 3
1.7 Research Methodology ......................................................................................... 3
1.8 The sample of the study ........................................................................................ 4
1.9 Previous Studies .................................................................................................... 4
Chapter 2: Literature Review
2.1 Introduction .......................................................................................................... 7
2.2 Appearance and development of letters of credit .............................................. 7
2.3 The letters of credit concept ................................................................................ 8
2.4 Parties of the letters of credit ............................................................................. 10
2.5 Types of the letters of credit .............................................................................. 10
2.5.1 Letters of credit where the strength of commitment ................................... 10
2.5.2 Letters of credit in terms of implementation............................................... 10
2.5.3 Letters of credit in terms of form ................................................................ 11
2.5.4 Letters of credit in terms of ways of shipping ............................................ 11
2.6 The importance of the letters of credit ............................................................. 12
2.7 Contractual arrangements under the letter of credit ...................................... 13
2.8 Documents for Letters of credit ........................................................................ 13
II
2.9 The problems facing the letters of credit in Palestine ..................................... 13
2.9.1
Inadequate the Palestinian investment climate ........................................... 13
2.9.2 Problems from the Palestinian Monetary Authority ................................... 14
2.9.3 Problems from businessmen (the clients) ................................................... 14
2.9.4 Problems from the banks operated in Palestine .......................................... 15
2.9.5 Problems from the relevant laws applicable in Palestine............................ 15
2.9.6 The difficulty of providing cash collateral and in kind required by the
banks ........................................................................................................... 16
Chapter 3
3.1 First Section: The study methodology and data analysis ................................ 17
3.1.1 Introduction ............................................................................................... 17
3.1.2 The study methodology............................................................................. 17
3.1.3 The population and the sample study ..................................................... 17
3.1.4 The tool of the study ................................................................................. 17
3.1.5 Validity of the questionnaire .................................................................... 18
3.1.5.1
Validity of the scale.............................................................................. 18
3.1.5.1.1
The results of internal consistency ................................................ 18
3.1.5.1.2
Structure Validity .......................................................................... 22
3.1.5.1.3
Reliability ...................................................................................... 23
3.2 Second Section: Test hypotheses of the study and interpret the results ........ 24
3.2.1 Introduction ............................................................................................... 24
3.2.2
Statistical Description of the study sample ............................................. 24
3.2.3 Test hypotheses of the study..................................................................... 30
3.2.3.1
Analysis of the paragraphs of the problems of credits facing the
Palestinian importer.............................................................................. 30
3.2.3.2
The first hypothesis: The form of ownership affects on the problems of
letter of credits issued from the perspective of Palestinian importers.. 31
3.2.3.3
The second hypothesis: The nationality of the bank affect on the
problems of letter of credit issued from the perspective of Palestinian
importers............................................................................................... 33
III
3.2.3.4
The third hypothesis: Capital owned by the person who asked to open
letter of credit affect on the problems of letters of credit issued from the
perspective of Palestinian importers .................................................... 34
3.2.3.5
The fourth hypothesis: Beneficiary of the letter of credit affects on the
problems of letter of credits issued from the perspective of Palestinian
importe ................................................................................................. 36
3.2.3.6
The fifth hypothesis: The currency that will be paid affect on the
problems of letter of credits issued from the perspective of Palestinian
importers............................................................................................... 38
Chapter 4: Results, Recommendations and The proposed studies
4.1 Results and the problems facing the Palestinian importer ............................. 40
4.2 Recommendations ............................................................................................... 41
4.3 The proposed studies .......................................................................................... 42
References ..................................................................................................................... 43
Appendix ....................................................................................................................... 44
IV
List of Tables
Table 1.1: The amount of letter credit in Palestine .............................................................. 11
Table 1.2: The amount of Palestinian external trade ........................................................... 12
Table 3.1: Likert scale .................................................................................................. 22
Table 3.2: Crushers The correlation coefficient between each paragraph from the
paragraphs of the first domain and the total degree for the domain ..................................... 24
Table 3.3: The correlation coefficient between each paragraph from the paragraphs of
the first Axis and the total degree for the Axis ............................................................. 26
Table 3.4: The correlation coefficient between each paragraph from the paragraphs of
the second Axis and the total degree for the Axis ......................................................... 26
Table 3.5: The correlation coefficient between each paragraph from the paragraphs of
the third Axis and the total degree for the Axis ............................................................ 28
Table 3.6: The correlation coefficient between each paragraph from the paragraphs of
the fourth Axis and the total degree for the Axis .......................................................... 37
Table 3.7: The correlation coefficient between each paragraph from the paragraphs of
the fifth Axis and the total degree for the Axis .............................................................. 38
Table 3.8: The correlation coefficient between the degree of each domain from the
questionnaire domains and the total degree for the questionnaire ................................. 38
Table 3.9: Educational Qualification ............................................................................ 39
Table 3.10: Specialization ............................................................................................ 40
Table 3.11: Job Title ...................................................................................................... 43
Table 3.12: Years of dealing in the letters of credit ...................................................... 44
Table 3.13: Form of ownership of the company ........................................................... 46
Table 3.14: The nationality bank which opened the credit ........................................... 46
Table 3.15: The size the company's capital ................................................................... 46
Table 3.16: The beneficiary of the credit ...................................................................... 59
Table 3.17: The currency used in the credit .................................................................. 59
Table 3.18: The arithmetic mean and the probability value (Sig.) for each paragraph of
the first domain ............................................................................................................... 59
Table 3.19: The arithmetic mean and the value of the probability (Sig.) Each paragraph
of the first axis ................................................................................................................ 59
V
Table 3.20: The arithmetic mean and the value of the probability (Sig.) Each paragraph
of the second axis ........................................................................................................... 59
Table 3.21: The arithmetic mean and the value of the probability (Sig.) Each paragraph
of the third axis ............................................................................................................... 59
Table 3.22: The arithmetic mean and the value of the probability (Sig.) Each paragraph
of the fourth axis ............................................................................................................ 59
Table 3.23: The arithmetic mean and the value of the probability (Sig.) Each paragraph
of the fifth axis ............................................................................................................... 59
VI
List of Figures
Figure 1.1: Necessity for Self-Compacting Concrete ..................................................... 5
Figure 3.1: Educational Qualification ........................................................................... 21
Figure 3.2: Specialization .............................................................................................. 23
Figure 3.3: Job Title ...................................................................................................... 23
Figure 3.4: Years of dealing in the letters of credit ....................................................... 32
Figure 3.5: Form of ownership of the company ............................................................ 32
Figure 3.6: The nationality bank which opened the credit ............................................ 33
Figure 3.7: The size the company's capital ................................................................... 35
Figure 3.8: The beneficiary of the credit ....................................................................... 36
Figure 3.9: The currency used in the credit ................................................................... 41
VII
Abstract
The study aimed to identify the problems of documentary credits issued, and study
the impact of variables, each of the (form of ownership, and the nationality of the bank
light of credit, and capital demanded to open the credit and the beneficiary of the credit
and currency which will be paid by) on the problems of documentary credits issued
from the viewpoint of Palestinian importers.
The study was depended on the questionnaire was distributed to 45 Palestinian
importer as the study population are Palestinian traders conquerors of documentary
credits. Was used analytical descriptive method through the study of the content, and
percentages and frequencies, the arithmetic average and test T (One sample T Test) and
the Cronbach alpha test and Pearson's correlation coefficient in order to access the
results.
The study concluded several conclusions, including: first, show that there are
problems in the conduct of documentary credits, but medium in general. Second, it was
concluded that the form of ownership affects the problems of documentary credits, but a
low degree. Third, also appeared that the nationality of bank credit has the effect of light
in the existence of problems of credit issued. Fourth, companies that capital is the
biggest problems facing the less due to the high level of confidence granted by banks to
large companies. Fifth, affects the beneficiary of the problems of relying on
documentary credits issued from the viewpoint of Palestinian importers. Sixth, the
currency used have a significant impact on the problems of documentary credits.
The study concluded that a set of recommendations as follows: first, banks ask for
give more attention to documentary credits through the system easier, faster and better
to make a documentary credit. Second, using fiscal and monetary policy to regulate the
Palestinian economy and encourage investment. Third, the establishment of an
economic entity can be mainly from the conclusion of agreements with States to
facilitate the import and further development of the process of documentary credits.
Fourth, work on the management of funding strategically and logically high. Fifth,
support and facilities for small business owners regarding the procedures of
documentary credits.
VIII
‫ملخص الدراسة‬
‫هدفت الدراسة إلى التعرف إلى مشكالت االعتمادات المستندية الصادرة‪ ,‬ودراسة أثر متغيرات‬
‫كل من (شكل الملكية‪ ,‬وجنسية البنك فاتح االعتماد‪ ,‬ورأس مال طالب فتح االعتماد والمستفيد من‬
‫االعتماد‪ ,‬والعملة التي سيتم الدفع بها) على مشكالت االعتمادات المستندية الصادرة من وجهة‬
‫نظر المستوردين الفلسطينيين‪.‬‬
‫وقد اعتمدت الدراسة التطبيقية على استبانه تم توزيعها على ‪ 45‬مستورد فلسطيني حيث أن‬
‫مجتمع الدراسة هم التجار الفلسطينيين فاتحي االعتمادات المستندية‪ .‬وتم استخدام المنهج الوصفي‬
‫التحليلي من خالل دراسة المحتوى‪ ،‬والنسب المئوية والتك اررات والمتوسط الحسابي واختبار ‪T‬‬
‫(‪ )One sample T Test‬واختبار ألفا كرونباخ ومعامل ارتباط بيرسون من أجل الوصول للنتائج‪.‬‬
‫وقد خلصت الدراسة إلى عدة نتائج منها‪ ,‬أوالً‪ :‬تبين أن هناك مشكالت في إجراء االعتمادات‬
‫المستندية ولكنها متوسطة بشكل عام‪ .‬ثانياً‪ :‬تم التوصل إلى أن شكل الملكية يؤثر على مشكالت‬
‫االعتمادات المستندية ولكن بدرجة قليلة‪ .‬ثالثاً‪ :‬ظهر أيضاً أن جنسية البنك فاتح االعتماد لها أثر‬
‫في وجود مشكالت االعتمادات الصادرة‪ .‬رابعاً‪ :‬الشركات التي رأس مالها أكبر تواجه مشكالت أقل‬
‫وذلك يعود إلى الثقة العالية التي تمنحها البنوك إلى الشركات الكبيرة‪ .‬خامساً‪ :‬يوثر المستفيد من‬
‫االعتماد على مشكالت االعتمادات المستندية الصادرة من وجهة نظر المستوردين الفلسطينيين‪.‬‬
‫سادساً‪ :‬العملة المستخدمة لها أثر ملحوظ على مشكالت االعتمادات المستندية‪.‬‬
‫وخلصت الدراسة إلى مجموعة من التوصيات أهمها‪ ,‬أوالً‪ :‬المصارف مطالبة بمزيد من االهتمام‬
‫باالعتمادات المستندية من خالل وضع نظام أسهل وأسرع وأوفر إلجراء االعتماد المستندي‪ .‬ثانياً‪:‬‬
‫استخدام وسائل السياسة المالية والنقدية من أجل تنظيم االقتصاد الفلسطيني وتشجيع االستثمار‪.‬‬
‫ثالثاً‪ :‬إقامة كيان اقتصادي يمكن وبشكل رئيس من إبرام االتفاقات مع الدول من أجل تيسير عمليات‬
‫االستيراد وزيادة تطوير عملية إجراء االعتمادات المستندية‪ .‬رابعاً‪ :‬العمل على إدارة عمليات التمويل‬
‫بشكل استراتيجي وبمنطقية عالية‪ .‬خامساً‪ :‬تقديم الدعم والتسهيالت ألصحاب الشركات الصغيرة فيما‬
‫يخص بإجراءات االعتمادات المستندية‪.‬‬
‫‪IX‬‬
Chapter 1
Research Proposal
1.1 Introduction
The letter of credit is a technique used to complete the transactions of payment relating
to foreign trade. A buyer in the scope of international exchange does not wish to pay
money for goods he does not receive, as well as the seller does not wish to ship goods
that he does not receive their price.
If the buyer accepted to pay the value of the goods by check or cash what can guarantee
that the goods will be shipped in a timely manner, and that the goods are in accordance
with the terms of the contract between the seller and the buyer.
On the other hand, if the goods were shipped by the seller to the buyer before receiving
the guaranteed value, it is worth the commitment of the buyer to pay before the due
dates with the currency specified in the contract of sale.
To remove any doubts that seller and buyer may have, we can use letter of credit, so the
definition of letter of credit is a letter from a bank guaranteeing that a buyer's payment
to a seller will be received on time and that is it the correct amount. In case that the
buyer is unable to make payment on the purchase, the bank will be required to cover the
full or remaining amount of the purchase.
The letters of credit have a particular importance for the Palestinian economy at this
stage.
And this importance appears as the result of the development on the recent political and
economic fields, which lead to improve the investment climate in Palestine. It also
increases the importance of the letter of credit that is issued in Palestine in light of
continued reluctance from the bank that works in Palestine to lend the Palestinian
economy. The bank justifies this by the increased high-risk in the Palestinian economy
and the lack of adequate safeguards.
1.2 Research Problem
Through this research we will answer these questions
1- What are the letter of credit problems that face importers in Palestine?
What is the effect of the form of ownership and nationality of the bank that
opens the letter of credit, capital, and the beneficiary of the letter of credit and
currency which will be paid out on the problems of credit from the standpoint of
importers in Palestine?
1
1.3 Research Objectives
This study aimed to achieve the following objectives:
1- Identifying the Letter of Credit.
2- Importance of letters of credit that are issued to Palestinian importers.
3- Knowledge of the problems of Letter of Credit issued from the perspective of
Palestinian importers.
4- Finding out the impact of the variables of all of form of ownership, and the
nationality of the bank, and capital to open the credit applicant and beneficiary
of the credit and currency which will be paid out on the problems of
documentary credits issued from the perspective of Palestinian importers.
1.4 Research Importance
The letter of credit has a great term in commerce and economy on international
commercial relationship the development and dealing with letter of credit to reduce
problem that faces the Palestinian trader and motivates him to connect and dealing with
external countries , this helps to reduce the link between the Palestinian economy and
the Israeli economy. Assistance offered documentary active foreign trade, as it is the
instrument creating the trust for creditors, so some considered as a magic solution to
remove the risks of doing business, whether at the local level or at the global level.
It also increases the importance of this study, as a result of the increasing rate of credit
grow thin general in Palestine, as the table number (1-1) illustrates this.
Table (1-1): The amount of letter credit in Palestine (Million dollars):
Year
Import letter
credit
Export letter
Credit
2006
108.34
2007
85.25
2008
86.18
2009
13.79
2010
146.24
8.31
14.98
11.86
113.20
12.55
Palestinian monetary of finance, 2011
Table number (1-2) shows the raising in Palestinian export even though the Palestinian
trade balance is highly suffering because we have increases in the amount of Palestinian
import, this requires performing and studying to help the Palestinian import in order to
solve the barriers and problems in the letter of credit.
Table (1-2): The amount of Palestinian external trade (Million dollars) :
Year
Imports
Exports
Trade balance
GDP
2006
919
3202
2523
4619
2007
960
3919
3008
5182
Palestinian monetary of finance, 2011
2
2008
911
4086
3126
6247
2009
678
4363
3444
6764
1.5 Research Limits
Limits of the place
Research will be attending a number of companies, institutions operating in Gaza, due
to the difficulty of movement between Gaza and the West because of the blockade.
Limits of the time
The research will be done within two months through the summer semester.
1.6 Research Hypothesis
The main hypothesis: Identifying the Problems of Letter of Credit issued from the
standpoint of importers in Palestine, and the ramifications of which the following subhypotheses:
1- The form of ownership affects on the problems of Letter of Credit issued from
the sight of the Palestinian importers.
2- The nationality of the bank which opened the credit affects on the problems of
Letter of Credit issued from the sight of the Palestinian importers.
3- The capital demanded to open the credit affects on the problems of Letter of
Credit issued from the sight of the Palestinian importers.
4- The beneficiary of the credit affects on the problems of Letter of Credit issued
from the sight of the Palestinian importers.
5- The currency that will be paid affect on the problems of Letter of Credit issued
from the sight of the Palestinian importers.
1.7 Research Methodology
To achieve the previous objectives of the research and access to the best techniques and
methods for detecting The letters of credit problems that are influencing the Palestinian
importer in Gaza Strip, the researcher will depend on the following scientific
approaches:
1- Primary research: including the legal data through which we can reach the
beginning references and previous studies that are related to this subject.
2- Secondary Research: Represented in research studies where the researcher will
reach them through his visits to the importers of Palestine in Gaza and
interviews with officials of the Monetary Authority.
3- The study will be descriptive and analytical: Identifying the requirements for
opening the letter of credit in a framework through which we can reach the
research objectives and identify the problems facing the Palestinian importer,
through questionnaire, interviews, and analytical tables and percentages.
3
1.8 The sample of the study
Due to the difficulty of scanning the number of traders who deal in contracts with letters
of credit so we will be conducting the study on (45) members, these members are the
Palestinian traders who opened letter of credit.
1.9 Previous Studies
(Study of Abo AL-Rab)
This study aimed to identify the problems facing the Palestinian importers in issuing a
LC and find out the impact of the variables of all of the form of ownership, the
nationality of the bank which opened the credit, the capital for the demander to open
LC, the beneficiary from LC and the currency in which payment is made by on the
Letter of credit problems from the Palestinian importers sight.
This study reaches to many results
1- There are problems in the issued Letters of credit for Palestinian importers.
2- There are no statistically significant differences in the degree of letter of credit
problems for the Palestinian importers due to the variable (the form of
ownership).
3- There are statistically significant differences in the degree of letter of credit
problems for the Palestinian importers due to the variable (the nationality of the
bank) which is the biggest problem facing the Palestinian commercial banks.
4- There are statistically significant differences in the degree of letter of credit
problems for the Palestinian importers due to the variable (the capital for the
demander to open LC) where it was found that the problems decrease when the
capital importer increase.
5- There are statistically significant differences in the degree of letter of credit
problems for the Palestinian importers due to the variable (the beneficiary from
LC).
6- There are statistically significant differences in the degree of letter of credit
problems for the Palestinian importers due to the variable (and the currency in
which payment is made by).
The conclusions for this study
First: The Palestinian National Authority should follow-up and monitor the trade
agreements with the Israeli side, especially the complexities and security procedures
that lead to delay the arrival of the goods in ports and remain for long periods, also The
Palestinian National Authority should update those agreements to serve the Palestinian
importer in order to treat them in the crossing points as the Israeli importer are treated.
4
Second: To decrease the letters of credit problems which the owners of the small
enterprises face. The banks can help these small enterprises by decreasing the insurance
that the bank request from such small enterprises, also providing highly qualified local
loyal to deal with the small enterprises.
(Study of Al Faleit)
This study aimed at determining the impact of banking facilities for banks operating in
Palestine on the various economic sectors, in addition to identify the reality of the
banks operating in Palestine and what is the most important problems that stand barrier
to progress in economic development.
This study reaches to many results
1- Banks operating in Palestine have the desire to expand the granting of facilities
for the various economic sectors, except for the agricultural sector due to the
high degree of risk in it.
2- There is interest from bank in guarantees provided by the client as a prerequisite
for acceptance of application facilitated.
3- The courts located in Palestine don’t doing their turn to solve the problems that
the banks face it and solve conflicts between banks and customers in arrears
nonpayment of their facilities, that’s led to weakness of the role of banks in
providing the facilities and the weakness of their impact on different economic
sectors.
The conclusions for this study
First: The need of businessmen and entrepreneurs to provide various guarantees to
satisfy the conditions is requests for approval of credit facilities by banks.
Second: This study recommends that concerned parties to work should enact special
laws to resolve disputes that are appeared between banks and customers, with work on
the activation of the courts.
(Study of Zayda)
This study aimed to identify one of the most serious banking phenomena faced by
operating banks in the Palestinian banking system, which is the phenomenon of tumble
"credit facilities".
This study reaches to many results
1- Policy conditions and economic conditions, away from reasons other credit,
contributed to a high proportion in the increase of the rate of tumble in all banks.
2- The study showed that the proportion of bad debts to credit facilities granted to
banks operating in Palestine, in the years 2000, 2001,2002.2003of the most
trouble dears in the banks.
5
As for the most important recommendations was represented by the need to adopt the
banks operating in Palestine to establish a fund to deal with bad debts to reduce the
losses along the banks, to be its deductions paid by the banks of the total profits derived
from its investments, and from the contribution of some of the institutions working in
the banking and financial institution deposit insurance and the stock market, and others.
6
Chapter 2
Literature Review
2.1 Introduction
The banks are considered the biggest sector which affects building the economic
structure for the state. They form with each other a reliable and effective organ in the
development of various sectors of national economy.
The trade sector represents great importance for the economies of all countries … Banks
financing of domestic and foreign trade (import and export) and the letters of credit
considered from the most important ways for that finance, and from the previous the
letters of credit consider - through the mediation between importers and exporters – the
link through it. We can evaluate network of operations extends between the local
branches and the foreign branches or correspondents of foreign banks to operate on the
convergence among themselves and provide confidence and security for their
transactions, because in these operations the importer and the exporter are interesting in
the ability of the other part to pay its obligations (Sisi, 2004: 201).
Because the main parties for the letter of credit (importer and exporter) represents
different counties which have different regulations and laws so International Chamber
of Commerce Significantly focused on this problem to find Scientific solution to ensure
the rights of all parties, and worked to avoid the problems before they occur, and access
the uniform concepts of interpreting the terms used in the letters of credit.
For this international organization had a significant role in the development of
arrangements for letters of credit and access to the general conditions and uniform
terminology for letter of credit, and in this way have been held many meetings and
scientific conferences which brings together banks experts and businessmen who
specialized in issues of international trade from different countries that participate as
members of the International Chamber of Commerce to discuss many issues that are
related to letters of credit, especially regulated the operation of opening letter of credit
and simplified its procedures, set a unified main condition to open letter of credit,
unification of concepts used to avoid conflicts that may arise because of them, and
maintain the rights of all transacting parties (Othman, 2005: 6-5).
2.2 Appearance and development of letters of credit
The letters of credit appeared and developed in Anglo-Saxon country then spread in
Europe and the rest of the world, the first users of the letter of credit are the local rulers
to get advances to secure the salaries of their servants, the first form of the letter of
credit returns to the year of 1201. Using of these credits increased widely since the
eighteenth century after the large industrial revolution in Europe and especially in
Britain, in order to finance foreign trade particularly trade in cotton (Diab, 1999: 7).
7
International Chamber of Commerce started the first important step through preparing
standard form to open letter of credit according to the general unified conditions that
were approved since 1933, but these conditions were primarily considered explanations
and details to protect the banks and interpretation of specific terms used.
Many modifications have been made on those conditions in the years
1953/1962/1974/1983 and finally in 1993. These modifications were in the general
conditions and the standard rules for the letters of credit consider natural reflection for
the rapid and continuous development in transportation technology, ways of shipping
and communications, methods of correspondence…..
From the significant achievements of International Chamber of Commerce in this way
the modifications issued in the book No. 1993. The modifications issued in 1983 were
results of long discussions and many studies by various committees included among its
members trade and industry experts, insurance agents, banks experts and shipping
agents.
But note that the General Conditions and the Standard Rules for letters of credit issued
by the International Chamber of Commerce were not mandatory on the parties of
dealing in the international scale, and then the acceptance by both parties (Source importer) the conditions of the International Chamber of Commerce should provide
expressly in letter of credit.
The latest modifications issued under the number (500) in 1993, which runs from the
first of January 1994 was more comprehensive and accurate than the General
Conditions and the Standard Rules contained in the modifications in 1983, also became
the application of conditions of International Chamber of Commerce on the letters of
credit is binding on all Member States of the International Chamber of Commerce even
if the letter of credit did not include explicitly shows that (Othman, 2005: 6).
2.3 The letters of credit concept
There are difficulties in the development of a comprehensive definition of the letter of
the credit and that is because the letter of credit has many forms, however there are
many definitions for the letter of credit contract.
The definition of the letter of the credit in Uniform Commercial Code (UCC):
means an engagement by a bank or another person made at the request of a customer
and of a kind within the scope of this Article (Section 5-102) that the issuer will honor
drafts or other demands for payment upon compliance with the conditions specified in
the credit. A credit may be either revocable or irrevocable. The engagement may be
either an agreement to honor or a statement that the bank or other person is authorized
to honor.
The United Nations Convention definition for the letter of the credit (UNC): For
the purposes of this convention, an undertaking is an independent commitment, known
in international practice as an independent guarantee or as a stand-by letter of credit,
8
given by a bank or other institution or person ("guarantor/issuer") to pay to the
beneficiary a certain or determinable amount upon simple demand or upon demand
accompanied by other documents, in conformity with the terms and any documentary
conditions of the undertaking, indicating, or from which it is to be inferred, that
payment is due because of a default in the performance of an obligation, or because of
another contingency, or for money borrowed or advanced, or on account of any mature
indebtedness undertaken by the principal/applicant or another person. (Article 2.
Undertaking)
The Palestinian trade draft law defined the letter of credit: Contract under which the
bank undertakes to open adoption at the request of one of its clients, called the
command to another person, called the beneficiary to ensure documents are movable
goods or prepared for transfer (Said, 2007: 11-12).
It also can be defined as: Undertaking by the issuing bank to the beneficiary that
payment be within a specified period of time, for the provision of the necessary
documents with the terms of credit (Sitpro, 2002: 5).
The letter of credit is also defined as: A medium for trade finance and to reduce the
risk of potential non-compliance with the importing source of payment or the possibility
of lack of commitment to the source with the importer in the delivery of goods (Foley,
2011: 14).
Other definition for the letter of the credit: Written undertaking issued by the Bank
at the request of imported goods in favor of the source in which the bank undertakes to
pay or accept drafts drawn upon in the amount of a particular and very specific order for
receipt of shipping documents in accordance with the terms of credit and shipped goods
that appear certain specifications and prices of specific (Sisi, 2004: 205).
In other form: Legal act in which the originator bank undertakes to pay the third party
that is named beneficiary or to the order of an amount of money according to the
instructions of the customer ordering, or undertakes to perform the value of promissory
note or promissory notes which have been withdrawn by the beneficiary or accept or
circulated directly, or any other bank authorized to do so to meet certain documents
match the terms and items that have been agreed upon in advance (Diab, 1999: 13).
Extrapolating the concept of letter of credit in accordance with the second article
of modifications No. 500 of 1993 is clear that the letter of credit or reserve letters of
credit are: arrangements whatever name or described - under which banks that open the
letter of credit undertake to: (Othman, 2005: 11)
First: Pay to or to the order of a third party "beneficiary" or accept and pay the value of
promissory notes drawn from the beneficiary.
Second: Authorizes another bank to pay or accept and pay promissory notes value.
9
Third: Authorization of another bank that is trading shipping documents stipulated in
the terms of accreditation, provided that those documents fully matching to
accreditation requirements and provisions.
Article III also shows that "the the letters of credit in normal transactions are separate
from the sales contracts that are the basis of those funds or banks linked to these
contracts do not abide by even if it included a reference to the dependence of those
contracts".
2.4 Parties of the letters of credit
From the previous definitions we can say that there are four parties to the letter of the
credit, which are: (Shahen, 2006: 173-174)
1- Importer: the buyer who request to open the letter of credit.
2- Issuer Bank: the bank who open the letter of credit for the benefit of the
exporter (the seller), then informing the seller about that through Correspondent
abroad bank
3- Abroad Bank: the correspondent bank, in which the exporter deals with abroad,
and the main task for this bank is receiving the shipping documents, auditing it
and to ensure compliance with the agreed specifications before paying for them
to the seller.
4- Exporter: the seller who exported the products according to the specifications
and the presentation of shipping documents to his bank to send them to the
importer bank.
2.5 Types of the letters of credit
First: Letters of credit where the strength of commitment
1- Letters of credit are subject to cancellation
2- The letters of credit in which the importer or the bank who open the credit can
cancel it in any time before the date of shipping the products, this type of credit
is uncommon because it is risky for the exporter.
3- Letters of credit are not subject to cancellation
The letters of credit in which the importer or the exporter cannot cancel unless
otherwise agreed , also the bank can't cancel or modify the letter of credit
without the acceptance of the exporter (Shahen, 2006: 174).
Second: Letters of credit in terms of implementation
1- Enhanced letter of credit
The letter of credit which includes the commitment from the person who opens
the letter of credit, also it includes commitment from other bank towards the
beneficiary.
10
2- Not enhanced letter of credit
The letter of credit that includes only the bank commitment which opened the
letter of credit towards the beneficiary without enhancing it. That means
without corresponding bank to meet the value of credit to the beneficiary of it.
3- Letters of credit through the acquaintance
Means the importer (who request open letter of credit) pays the value of the
products to the bank in the moment of receiving the documents for that, then the
bank sending the money to the corresponding bank to pay this money to the
exporter (Shahen, 2006: 175).
4- Letter of credit in acceptance
Includes a commitment from the bank to accept the promissory note while the
promissory note is due and the performance of the price is usually later.
5- Deferred payment credits
Credits that are open for the benefit of the specific beneficiary by the bank on
the condition that the bank to pay the value of the documents or credit after a
deferred period without that there will be bond withdrawn on the bank, where
the credit’s value will be paid after specified period will be agreed between the
applicant and the beneficiary of credit without providing withdrawn bond, if the
letter of credit text on the postponement of payment of the price. It pays on the
date specified under the terms of credit (Said, 2007: 25).
Third: Letters of credit in terms of form
1- Letters of credit can be converted
The credits in which the exporter (seller) has the right in conversing.
2- Revolving letters of credit
The credits which are allowed to be opened under specific conditions depending
on the nature of the requested product, it's importance and the society's need to
this product throughout the year and in different times, or the nature of the
product damage and expire if we imported or exported the products at once
(Shahen, 2006: 175).
3- letters of credit corresponding to other letters of credit
Credits opened by the beneficiaries through the guarantee of other letters of
credit which opened previously.
4- Letters of credit allow the advance payment (Said, 2007: 28).
Fourth: Letters of credit in terms of ways of shipping
1- Letters of credit are retail
In this type the exporter (seller) has the right in sending the products on stages
and collecting the value of every stage from the bank when delivered. The
documents of product shipping to the bank, these credits are unlike other nonretail credits where the exporter is committed to ship goods at once (Shahen,
2006: 175).
2- Letters of credit does not allow partial shipping.
11
3- Letters of credit allow return of shipping
In this type of credits allowed to ship goods to a particular country, then let the
re-shipped to the importing country and that happens often for the country that
have no ports freely, and required passage the goods through the territory of
other neighboring countries which have ports.
4- Letters of credit are not allowed to re-shipping and not allowed to change the
shipment or recharge of the goods (Said, 2007: 28-29).
2.6 The importance of the letters of credit (Diab, 1999: 8-9), (Othman, 2005:
13-14)
1- The letter of the credit provides the confidence to the seller that he will get
surely the price of the goods which were shipped to the buyer and protect him
from risks of selling in a foreign country in which he does not know anything
about the systems and laws of this country, also protect him from risk of
litigation and the attendant difficulties and delay in the requirement for the price.
2- The letter of the credit protects the seller from many difficulties resulting from
the systems of monetary monitoring in the buyer country, where the buyer takes
care about taking all necessary procedures before opening letter of credit.
3- The letter of credit protects the sellers –who is committed about shipping the
goods, sending the documents and paying the expenses– from the damages,
where the bank who issued the credit or confirmed it guarantees paying the
value of the goods for the seller in the letter of the credit which sending to him.
4- The letter of the credit available to the buyer to get the value of the goods as
soon as it shipped and delivery the documents to the bank or deduct the
promissory note which he withdrawn at the price that the bank dealing with it in
the bank's country.
5- The letter of credit provides to the seller a guarantee from the bank confirming
that the bank will get the price of the goods prior to the transfer of ownership to
the buyer and the subsequent risks.
6- The letter of the credit provides the seller with confidence and trust about him
getting the value of the goods after shipping and delivering the documents
whether from originator bank or correspondent bank.
7- The letter of the credit provides the confidence to the buyer about not paying the
value of the good except after getting the shipping documents, these documents
prove fully shipping the goods, transfer of ownership from the hands of the
seller and it is in the way to the buyer.
8- In many cases the letter of the credit allows the buyer to buy in the prices that
are considerably lower than the prices of long-term purchasing.
9- Provides legal protection for the dealer parties, provide legal protection for the
parties to the deal, where they are drafting, organizing and theorizing letter of
credit through a combination of legislations, rules and administrative and
regulatory decisions formed together legal protection of all parties of the letter of
credit in general and the seller and the buyer in particular.
12
2.7 Contractual arrangements under the letter of credit
The Letter of credit includes many of contractual arrangements that reflect the
contractual relationship between the various parties in the letter of credit, From these
arrangements: (Othman, 2005: 11-12)
1- The sales contract that is between the seller or the beneficiary and the buyer or
importer, and a copy of this contract must be deposited at the bank which issues
the credit.
2- An agreement made between the buyer (applicant of the credit) and the Bank
(issuer of the credit) especially with regard to the arrangements relating to the
rights and obligations of the two parties.
3- The letter of the credit which issued by the bank that open the credit explains the
obligations of the bank towards the beneficiary and the documents which the
beneficiary should provide and present it to obtain the value of the sales.
Each contract or agreement must be independent and specific according to the nature of
the relationship between the parties.
2.8 Documents for Letters of credit
Banks provide a great interest in the availability of the necessary documents which have
all the conditions of the letter of credit to settle the credit value, and these documents
include: (Shahen, 2006: 176)
12345-
Shipping invoice.
Insurance policy of goods.
Certificate of origin (Nationality of the goods).
Health certificate for food commodities.
Certificate of weight of the goods.
2.9 The problems facing the letters of credit in Palestine
1- Inadequate Palestinian investment climate:
We know that the availability of political and economic stability is critical to
reach good investment climate, but in Palestine the political and economical
stability is not available and that is affecting on the credit facilities size which
provided to the various economic sectors (Abu Muammar, 2002: 10).
In addition, there are frequent closures to West Bank and Gaza Strip which are
imposed by the Israeli occupation authority, causing many bad effects on the
Palestinian investment climate (Fallit, 2004: 58).
Not only that, but that imposed restrictions on the movement of people, goods
and vehicles play a major role in the fear of banks to provide appropriate credit
facilities to the various sectors of the Palestinian economy. When looking at the
Palestinian infrastructure we find it very weak not fit with the investment
climate needed by any country in order to encourage and motivate banks to grant
13
the facility (Ashour, 2002: 410), and the economic sector of the Palestinian in
particular, is weak and depends mainly on the economies of neighboring
countries (Abu Muammar, 2002: 10).
2- Problems from the Palestinian Monetary Authority:
There are many matters that the Palestinian Monetary Authority as an alternative
to the Palestinian Central Bank should be carried out to not be barrier to the
credit facilities, and these things include: (Fallit, 2004: 62)
1- The inability of the Palestinian Monetary Authority to control the banking
position in Palestine.
2- Not activate the central risks in the Palestinian Monetary Authority. And that
is through trying to determine the risks surrounding the banks and try to
avoid them.
3- Weakness of the financial institutions that support the Monetary Authority
(Activate stock exchange- Institutions guaranteeing loans- Institutions
guaranteeing deposits- Secure financing laws).
4- The commercial bank worked to attract the customers' deposits and savings'
funds and transfer it to outside, so why the Palestinian Monetary Authority
do not impose specific lending rate on the Palestinian banks working in West
Bank and Gaza Strip?
5- The inability of PMA to play the last lender turns for the banks.
6- The failure of the monetary authority to force banks to raise the level of
funding and loans depending on the size of deposits and not to update the
customs law, commercial law and unification of laws between the West
Bank and Gaza Strip by the concerned authorities coordinated with the
Monetary Authority.
7- The absence of an insurance company against political and economic risks
that surround the Palestinian environment.
8- Development of the volume of banking business faster than the development
of the regulatory structure for the Monetary Authority, and the legal
structure governing the work of the banking.
9- The absence of the national currency plays a critical role in limiting the
ability of banks to provide loans and confuse its work, and that is through the
banks fear to provide loans for example in NIS and have deposits in JD or
USD which rise in its value with the time so banks are trying to move away
and that’s through to not finance the investment operations which needing
long-term loans.
3- Problems from businessmen (the clients):
There are many problems coming from businessmen’s side, which are:
(Fallit, 2004: 63) and (Shaheen, 2006: 48)
1- The clients do not provide new good economic feasibility studies which are
reliable and that is because there are no consulting institutions doing that.
2- Businessmen’s uncertainty about their ability to abide to their financial
commitments.
3- Some clients hide their real data in order to tax evasion.
14
4- The clients don’t respond to the banks requests relating to monitor the
accounts of the project.
5- Non-payment of credit facilities in a timely manner.
6- Deterioration of the financial situation of the clients.
7- The presence of dislocations at the administrative Clients.
8- Provide guarantees less than the value of the loans.
4- Problems from the banks operated in Palestine:
The processes of presence policy makers credit facilities in the branches of
foreign banks in the headquarters of the bank leads to the granting the branches
managers in Palestine for the specific terms of reference and the necessity of
their return to senior management in many of the issues, which do not fit with
the speed needed for decision-making process to grant the facilities, especially
the headquarter do not give the quick responding.
In addition to that the foreign banks tend to reduce the lending in the local
market especially, absence of an institution to secure the deposits these matters
pushing the banks to reduce the lending which led to conservative credit policy,
also the banks cannot provide long-term or middle-term loans because the
deposits have other entitlements and the majority of them are short-term
deposits, so there is no expected increasing in average maturity period of loans if
there is a parallel increase in the maturity of deposits or if the development of a
mechanism to cover the unexpected changes in interest rates.
There is also a significant weakness in the efficiency of the technical staff
working in local and foreign banks.
Also the policy makers of credit facilities in foreign branches in the headquarters
of the bank, tend to reduce the limited credit to the benefits of their old clients in
abroad on the interest of new customers in Palestine, this policy depends on an
the old clients in abroad and they have enough credit history or a long
relationship with these banks, leading to a lack of credit risk. This leads to not
giving opportunity for new customers in Palestine in the possession of sufficient
credit history. This affects to not give the opportunity for the new clients in
Palestine.
5- Problems from the relevant laws applicable in Palestine: (Ashour, 2002: 410)
Many researchers noted that that the legislation relating to the Palestinian
solution to the differences and conflicts of banks with their clients characterized
by the existence of a legislative vacuum leads to the rule of chaos and weakness,
whether chaos at work, or weakness in human resources working in these courts
are trying to apply the laws in question.
Many of researchers said that the legal system applied in Palestine is
characterized by weak and needs to develop and to introduce legal legislation are
special for banking business with the development of mechanisms for the
implementation of these laws, also many of researchers see that is not enough to
issue legislations, but also must respect these laws and their application in
addition to enforcing the law on all the Palestinian people without
15
discrimination, giving an atmosphere of safety and considered that a source of
reassurance to banks and clients.
6- The difficulty of providing cash collateral and in kind required by the
banks: (Fallit, 2004: 60)
From the problems limit the ability of banks when granting facilities in Palestine
that the management of these banks refuse to grant any Facilitate only the
presence of collateral in cash or in kind with the omission of other collateral
only if there is collateral in cash or in kind with the omission of other collateral
(as the profitability of the project, the credibility of the client, as well as the
efficiency of those who work and their technical and administrative), the banks
often focus on real estate guarantees which have a lot of problems, from these
problems when we looking to the types of land ownership in Palestine we find it
divided into three categories:
1- Owned land by Department of Land Registration (tabo): these lands only can
be mortgaged.
2- Amiri lands (financial): Land registered with the Department of Finance not
in the Department of Land Registration and can't mortgage.
3- Government land: Control it without selling or buying these lands.
16
Chapter 3
3.1 First Section: The study methodology and data analysis
3.1.1 Introduction
The study methodology and its procedures consider a basic through which we can do
the applied side of the study, and also getting on the required data to do the statistical
analysis to reach to the results, thereby achieving the goals that are seeked.
This section describes the study methodology, individuals (population), and the sample
of the study, and also it includes a description to the procedures that the researcher
conducted in designing the study tool and the tools used to collect the study data, this
section ends with the statistical treatments which used in data analysis and getting the
results, the description of these procedures:
3.1.2 The study methodology
The researchers used the descriptive and analytical methodology which include "The
Letter of Credit Problems that are influencing the Palestinian Importer" the descriptive
and analytical methodology tries to compare, explain, and evaluate the hope of reaching
a meaningful generalizations increases the knowledge about the subject.
The researchers used two basic information sources:
Secondary sources: to treat the theoretical framework the researchers went to the
sources of secondary data, which represented in the books, the Arabic and foreign
references, journals, essays, reports, interviews, previous researches and studies on the
subject of this study and search and reading in various internet sites.
Primary sources: to treat the analytical side the researchers went to the sources of
secondary data through questionnaire as the main tool to the research, which designed
especially for that purpose.
3.1.3 The population and the sample study
The study population consisted of Palestinian importers, who are dealing with letters of
credit, and the researcher using a random sample, were distributed 45 questionnaires to
the study population were obtained 40 questionnaire, rate of return 88.8%.
3.1.4 The tool of the study
The questionnaire was prepared as follows
1- Preparation of a preliminary questionnaire for use in collecting data and
information.
2- Showing the questionnaire on the supervisor in order to test their suitability for
all data.
17
3- Modify the questionnaire primarily according the supervisor sight.
4- Showing the questionnaire on a group of arbitrators, who in turn provide advice
and guidance to modify and delete the necessary.
5- Distribution of the questionnaire to all members of the sample to collect the
necessary data for the study, and the questionnaire has been divided into two
parts as follows:
First part: consist of the general information about the study population
(information about the credit and about the respondent).
Second part: consist of the letters of credit problems that’s influencing on the
Palestinian importer and it was divided into five sections as follows:
First section: Discusses the problems of letters of credit facing the
Palestinian importer in terms of form of ownership.
Second section: Discusses the problems of credit facing the Palestinian
importer in terms of nationality of the bank that open the letter of credit.
Third section: Discusses the problems of credit facing the Palestinian
importer in terms of the Capital of the applicant for opening letter of
credit.
Fourth section: Discusses the problems of credit facing the Palestinian
importer in terms of the beneficiary of the letter of credit.
Fifth section: Discusses the problems of credit facing the Palestinian
importer in terms of the currency in which payment is made by.
Likert scale used to measure the responses of respondents to the questionnaire
paragraphs according to the table (3-1)
Response
strongly
disagree
undecided
agree
strongly
disagree
agree
Degree
1
2
3
4
5
The researcher selected degree (1) for the response (strongly disagree) thus, the relative
weight in this case is 20%, which is appropriate with this response
3.1.5 Validity of the questionnaire
Means the questions of the questionnaire measure what it designed to measure, the
researchers have verified the validity of the questionnaire through instrument validity.
3.1.5.1 Validity of the scale
3.1.5.1.1 First: The results of internal consistency
The consistency of each paragraph of the questionnaire with the domain to which it
belongs to this paragraph, the researchers calculated the internal consistency of the
questionnaire through calculated the correlation coefficients between each paragraph of
the questionnaire paragraphs and the total score for the domain.
18
Table (3-2) shows the correlation coefficient between each paragraph from the
paragraphs of the first domain and the total degree for the domain, Which shows that
the correlation coefficients significant at the level of significance α =0.05, and so the
domain is verified about what it put to measure.
Table (3-2)
The correlation coefficient between each paragraph from the paragraphs of the
first domain and the total degree for the domain
No.
Paragraph
The difficulty of letters of credit
1
procedures
Trend to import through a low credit
2
Problems in the movement of the
3
crossings
Dumping Markets of smuggled goods
4
Person Correlation
0.425
P-value (Sig.)
0.003
0.652
0.550
0.000
0.000
0.350
0.040
Correlation is statistically significant at the level of significance α = 0.05
Table (3-3) shows the correlation coefficient between each paragraph from the
paragraphs of the first Axis and the total degree for the Axis, Which shows that the
correlation coefficients significant at the level of significance α =0.05, and so the Axis
is verified about what it put to measure.
Table (3-3)
The correlation coefficient between each paragraph from the paragraphs of the
first Axis and the total degree for the Axis
No.
Paragraph
Form of ownership affects the cost of
1
opening letter of credit.
The presence of the regulatory system
2
in the company contributes in the
increasing of using the letters of credit.
Whenever the number of partners
3
increase, dealing in the credit also
increase.
The terms of the company limit the use
4
of credits.
Limitation of Liability in the company
5
increases the use of credits.
Person Correlation
0.690
P-value (Sig.)
0.000
0.728
0.000
0.669
0.000
0.742
0.000
0.768
0.000
Correlation is statistically significant at the level of significance α = 0.05
19
Table (3-4) shows the correlation coefficient between each paragraph from the
paragraphs of the second Axis and the total degree for the Axis, Which shows that the
correlation coefficients significant at the level of significance α =0.05, and so the Axis
is verified about what it put to measure.
Table (3-4)
The correlation coefficient between each paragraph from the paragraphs of the
second Axis and the total degree for the Axis
No.
Paragraph
The nationality of the bank affect on
1
the duration of receiving and shipping
the goods
Insurance required by the banks is very
2
high
the foreign banks demand to promote
3
credit
Nationality of the bank affects the ease
4
of the letters of credit procedures.
Economic stability of the markets in the
5
countries affects use of credits.
International agreements encourage the
6
use of credits.
The language of the bank that open the
7
credit has big effect on opening letter of
credit.
Person Correlation
0.350
P-value (Sig.)
0.013
0.697
0.000
0.757
0.000
0.665
0.000
0.285
0.037
0.682
0.000
0.643
0.000
Correlation is statistically significant at the level of significance α = 0.05
Table (3-5) shows the correlation coefficient between each paragraph from the
paragraphs of the third Axis and the total degree for the Axis, Which shows that the
correlation coefficients significant at the level of significance α =0.05, and so the Axis
is verified about what it put to measure.
Table (3-5)
The correlation coefficient between each paragraph from the paragraphs of the
third Axis and the total degree for the Axis
No.
Paragraph
The size of capital has direct
1
relationship about the letters of credit
problems.
Large amount of capital facilitates the
2
process of opening credits.
Large amount of capital reduces the
3
need for credit enhancement.
Sources for obtain funding for the
4
20
Person Correlation
0.672
P-value (Sig.)
0.000
0.308
0.027
0.725
0.000
0.511
0.000
5
6
company affect the ease of opening
credit.
Method of calculating profits have an
impact on the use of credits.
letters of credit reduce the opportunities
of investment.
0.557
0.000
0.448
0.002
Correlation is statistically significant at the level of significance α = 0.05
Table (3-6) shows the correlation coefficient between each paragraph from the
paragraphs of the fourth Axis and the total degree for the Axis, Which shows that the
correlation coefficients significant at the level of significance α =0.05, and so the Axis
is verified about what it put to measure.
Table (3-6)
The correlation coefficient between each paragraph from the paragraphs of the
fourth Axis and the total degree for the Axis
No.
Paragraph
There is no correspondent banks to
1
local banks in the exporting country.
Not
accurately
determine
the
2
specifications of the goods.
Provisioning and reserves have an
3
impact on the use of credits.
The legal form to the beneficiary affect
4
on the possibility of opening the credit.
The nationality of the beneficiary affect
5
on the possibility of opening credit.
Person Correlation
0.714
P-value (Sig.)
0.000
0.404
0.005
0.446
0.002
0.402
0.005
0.657
0.000
Correlation is statistically significant at the level of significance α = 0.05
Table (3-7) shows the correlation coefficient between each paragraph from the
paragraphs of the fifth Axis and the total degree for the Axis, Which shows that the
correlation coefficients significant at the level of significance α =0.05, and so the Axis
is verified about what it put to measure.
Table (3-7)
The correlation coefficient between each paragraph from the paragraphs of the
fifth Axis and the total degree for the Axis
No.
Paragraph
Changing exchange rates lead to losses
1
and an increase in costs.
The opening credits without a currency
2
of the company caused problems in the
21
Person Correlation
0.737
P-value (Sig.)
0.000
0.749
0.000
3
4
5
payment of the credits.
High banks commissions in the foreign
country.
Financial risk management and price
fluctuations have an impact on the use
of credits.
manage the movement of Cash flow has
an impact on the use of credits.
0.388
0.007
0.820
0.000
0.683
0.000
Correlation is statistically significant at the level of significance α = 0.05
3.1.5.1.2 Second: Structure Validity
The structure validity consider one from the measurements of validity tool which
measure the achievement of the goals that the tool wants to reach, and shows the
relevance of each domain from the study domains about the total degree to the
paragraphs of questionnaire.
Table (3-8) shows that all the correlation coefficients in all the questionnaire domains is
Statistically significant at the level of significance α =0.05, and so all domains are
verified about what it put to measure.
Table (3-8)
The correlation coefficient between the degree of each domain from the
questionnaire domains and the total degree for the questionnaire
No.
Paragraph
1
shows the letters of credit problems
facing the Palestinian importer.
2
The impact of the form of ownership on
the letters of credit problems issued from
the perspective of Palestinian importers.
3
The impact of the nationality of the bank
that open the credit on the letters of
credit problems issued from the
perspective of Palestinian importers.
4
The impact of the capital applicant to
open the credit on the letters of credit
problems issued from the perspective of
Palestinian importers.
5
The impact of the beneficiary of the
credit on the letters of credit problems
issued from the perspective of
Palestinian importers.
6
The impact of the currency that will be
paid by on the letters of credit problems
issued from the perspective of
Palestinian importers.
7
The second domain.
Person Correlation
0.530
P-value (Sig.)
0.000
0.728
0.000
0.831
0.000
0.839
0.000
0.746
0.000
0.567
0.000
0.991
0.000
Correlation is statistically significant at the level of significance α = 0.05
22
3.1.5.1.3 Third: Reliability
Reliability means that the questionnaire will give the same results if it is redistributed
more than once under the same circumstances and conditions, or it means stability in the
results of the questionnaire and not change significantly if it were re-distributed on the
sample several times during certain periods of time.
It was found that the value of Cronbach's alpha is high (0.840) thus, the questionnaire in
its final form as it is in the Appendix (1) available for distribution.
The following statistical tools have been used
1- Percentages and frequencies, the arithmetic mean and the mean relative: This
command is used mainly for the purpose of knowledge about categories
frequency of a variable, and benefit the researchers in the description of the
study sample.
2- Cronbach's Alpha test determine the stability of the questionnaire paragraphs.
3- Pearson Correlation Coefficient to measure the degree of correlation, this test
used to find internal consistency and structure validity.
4- One sample T Test to know whether the average degree of response had reached
to the degree of impartiality 3 or not.
23
3.2 Second Section: Test hypotheses of the study and interpret the
results
3.2.1 Introduction
This section includes a presentation of data analysis and testing of hypotheses of the
study, and that by answering the study questions and review the main results of the
questionnaire and that have been reached through the analysis of its paragraphs.
3.2.2 Statistical Description of the study sample
First: General information about the responder of the company

Distribution of the sample according to the educational qualification
Table (3-9) shows that a rate of 67.5% holding bachelor's degree, 20.0% have
master's degree, while showing that 12.5% have other degrees.
Table (3-9): Educational Qualification
Educational Qualification
Bachelor
Master
Doctorate
Other
Total
0%
Number
27
8
5
40
Percentage %
67.5
20.0
12.5
100
12.50%
Bachelor
20%
67.50%
Master
Doctorate
Other
Figure (3-1)
24

Distribution of the sample according to the specialization
Table (3-10) shows that a rate of 50.0% Accounting specialization, 10.0%
economy specialization, 5% Financial and Banking Sciences, while showing that
35.0% have other specializations.
Table (3-10): Specialization
Specialization
Accounting
Economy
Financial and Banking
Sciences
Other specializations
Total
Number
20
4
2
Percentage %
50
10
5
14
40
35
100
Accounting
35%
50%
economy
Financial and Banking Sciences
other
10%
5%
Figure (3-2)

Distribution of the sample according to the job title
Table (3-11) shows that a rate of 15.0% work as head of accounting
department, 37.5% traders, 25.0% accountants, while showing that
22.5% have other works.
Table (3-11): Job Title
Job Title
Head of accounting department
Traders
Accountants
Other works
Total
Number
6
15
10
9
40
25
Percentage %
15.0
37.5
25.0
22.5
100
22.50%
Head of accounting
department
15%
Traders
37.50%
25%
Accountants
Other works
Figure (3-3)
Second: Information about the company which opened the letter of credit

Distribution of the sample according to the years of dealing in the
letters of credit
Table (3-12) shows that a rate of 40.0% from the companies dealing
with the credits less than 5 years, 22.5% from 5 to less than 10 years,
17.5% from 10 to less than 15 years, while showing that 20.0% 15 years
and over.
Table (3-12): Years of dealing in the letters of credit
Years of dealing in the
letters of credit
Less than 5 years
From 5 to less than 10 years
From 10 to less than 15
years
15 years and over
Total
Number
Percentage %
16
9
7
40.0
22.5
17.5
8
40
20.0
100
20%
40%
17.50%
Less than 5 years
From 5 to less than 10
years
22.50%
From 10 to less than 15
years
15 years and over
Figure (3-4)
26

Distribution of the sample according to the form of ownership of the
company
Table (3-13) shows that a rate of 40.0% from the companies are
Individual companies, 7.5% Partnerships, 50% Private shareholding
companies, while showing that 2.5% Public shareholding companies.
Table (3-13): Form of ownership of the company
Form of ownership of
the company
Individual companies
Partnerships
Private shareholding
companies
Public shareholding
companies
Total
Number
Percentage %
16
3
20
40.0
7.5
50.0
1
2.5
40
100
Individual companies
40%
7.50%
Partnerships
1.2
50%
Private shareholding
companies
Public shareholding
companies
Figure (3-5)

Distribution of the sample according to the nationality bank which
opened the credit
Table (3-14) shows that a rate of 100% the nationality bank which
opened the credit is domestic.
Table (3-14): The nationality bank which opened the credit
The nationality bank
which opened the credit
Domestic
Israeli
Jordanian
Foreign
Total
Number
Percentage %
40
40
100
100
27
0%
Domestic
Israeli
Jordanian
100%
Foreign
Figure (3-6)

Distribution of the sample according to the size the company's
capital
Table (3-15) shows that a rate of 20.0% from the companies the size of
their capital is less than $ 1,000, 32.5% from $ 100,000 to $ 250,000,
20.0% from $ 250,000 to $ 500,000, while showing that 27.5% more
than $ 500,000.
Table (3-15): The size the company's capital
The size the company's
capital
Less than $1,000
From $100,000 to
$250,000
From $250,000 to
$500,000
More than $500,000
Total
27.50%
Number
Percentage %
8
13
20.0
32.5
8
20.0
11
40
27.5
100
20%
Less than $1,000
From $ 100,000 to $ 250,000
20%
32.50%
From $250,000 to$ 500,000
More than $500,000
Figure (3-7)
28

Distribution of the sample according to the beneficiary of the credit
Table (3-16) shows that a rate of 37.5% From the companies the
beneficiary of the credit is trader or a local factory, 5.0% trader or Israeli
factory, 5.0% trader or Jordanian factory, while showing that 52.5%
trader or Foreign factory.
Table (3-16): The beneficiary of the credit
The beneficiary of the credit
Trader or a local factory
Trader or Israeli factory
Trader or Jordanian factory
Trader or Foreign factory
Total
Number
15
2
2
21
40
Percentage %
37.5
5
5
52.5
100
Trader or a local factory
37.50%
Trader or Israeli factory
52.50%
Trader or Jordanian
factory
5%
Trader or Foreign factory
5%
Figure (3-8)

Distribution of the sample according to the currency used in the
credit
Table (3-17) shows that a rate of 77.5% From the companies the
currency used in the credit is US dollar, 2.5% the currency used in the
credit is Jordanian Dinar, 15.0% the currency used in the credit is
Shekel, while showing that 5.0% other.
Table (3-17): The currency used in the credit
The currency used in the
credit
US dollar
Jordanian Dinar
Shekel
Other
Total
29
Number
Percentage %
31
1
6
2
40
77.5
2.5
15.0
5.0
100
5%
15%
2.50%
US dollar
Jordanian Dinar
77.50%
Shekel
Other
Figure (3-9)
3.2.3 Test hypotheses of the study
3.2.3.1 Analysis of the paragraphs of the problems of credits facing the
Palestinian importer
T test was used to determine whether the average degree of response had reached a
degree of neutrality or not and this degree Is 3 . the Results as the follows:
Table (3-18):
The arithmetic mean and the probability value (Sig.) for each paragraph of the
first domain
No.
Paragraph
The
The
The
P-value
Ranking
arithmetic relative
value of
(Sig.)
mean
mean
the test
1
The difficulty of
2.98
59.5
-0.141
0.444
4
the letters of
credit
procedures.
2
Trend to import
3.33
66.5
1.963
0.028
3
by using low
credits.
3
Problems in the
4.53
90.5
11.388
0.000
2
movement of the
crossings.
4
Dumping
4.58
91.5
14.755
0.000
1
Markets of
smuggled goods.
All paragraphs
3.85
77
11.982
0.000
The arithmetic mean statistically significant at the level of significance α = 0.05
30
From Table (3-18)
 The mean of the fourth paragraph "Dumping Markets of smuggled
goods" equal 4.58 that’s mean the relative mean is 91.5%, and Sig. equal
0.000, so that this paragraph consider statistically significant at the level
of significance α = 0.05, which shows that the average degree of
response to this paragraph has increased on the degree of neutrality
which is 3, and this means there is approval by the sample members to
this paragraph.
 The mean of the first paragraph "The difficulty of the letters of credit
procedures" equal 2.98 that’s mean the relative mean is 59.5%,
Significance equal 0.444 so that this paragraph consider NOT
statistically significant at the level of significance α = 0.05, which shows
that the average degree of response to this paragraph does not differ
substantially from the degree of neutrality which is 3.
 In general we can say that the relative mean for all domain paragraphs
equal 77%, significance equal 0.000 so that the domain consider
statistically significant at the level of significance α = 0.05, which shows
that the average degree of response to this domain has increased on the
degree of neutrality which is 3, and this means there is approval by the
sample members to this domain.
3.2.3.2 The first hypothesis: The form of ownership affects on the
problems of letter of credits issued from the perspective of Palestinian
importers.
T test was used to determine whether the average degree of response had reached a
degree of neutrality or not and this degree Is 3 . the Results as the follows:
Table (3-19)
The arithmetic mean and the value of the probability (Sig.) Each paragraph of the
first axis
No.
Paragraph
The
arithmetic
mean
The
relative
mean
The
value of
the test
1
Form of ownership
affects the cost of
opening letter of credit.
The presence of the
regulatory system in the
company contributes in
the increasing of using
3.38
67.50
2.303
* 0.013
2
3.30
66.00
1.637
0.055
3
2
31
P-value Ranking
(Sig.)
the letters of credit.
3
4
5
Whenever the number
of partners increase,
dealing in the credit
also increase.
The terms of the
company limit the use
of credits.
2.83
56.50
-1.226
0.114
5
2.85
57.00
-1.062
0.147
4
Limitation of Liability
in the company
increases the use of
credits.
3.48
69.50
3.128
* 0.002
1
All paragraphs
3.17
63.30
1.466
0.075
The arithmetic mean statistically significant at the level of significance α= 0.05
Table (3-19) show us the follows



The arithmetic mean of the fifth paragraph "Limitation of Liability in the
company increases the use of credits" equal 3.48 that’s mean the relative mean
equal 69.50% , and Sig. equal 0.002, so that this paragraph consider
statistically significant at the level of significance α = 0.05, which shows that the
average degree of response to this paragraph has increased on the degree of
neutrality which is 3, and this means there is approval by the sample members to
this paragraph.
The arithmetic mean of the third paragraph "Whenever the number of partners
increase, dealing in the credit also increase" equal 2.83 that’s mean the relative
mean equal 56.50%, and Sig. equal 0.114, so that this paragraph consider
statistically significant at the level of significance α = 0.05, which shows that the
average degree of response to this paragraph does not differ substantially from
the degree of neutrality which is 3.
In general we can say that the relative mean to all paragraphs of the axis is equal
63.30% , and Sig. equal 0.075, so that the axis is statistically significant at the
level of significance α = 0.05 , which shows that the average degree of response
to this axis does not differ substantially from the degree of neutrality which is 3.
Result of the hypothesis
The form of ownership have a moderate affect on the problems of letter of credit issued
from the viewpoint of Palestinian importers.
32
3.2.3.3 The second hypothesis: The nationality of the bank affect on the
problems of letter of credit issued from the perspective of Palestinian
importers.
T test was used to determine whether the average degree of response had reached a
degree of neutrality or not and this degree Is 3 . the Results as the follows:
Table (3-20)
The arithmetic mean and the value of the probability (Sig.) Each paragraph of the
second axis
No.
Paragraph
1
The nationality of the
bank affect on the
duration of receiving
and shipping the goods.
Insurance required by
the banks is very high.
The foreign banks
demand to promote
credit.
Nationality of the bank
affects the ease of the
letters of credit
procedures.
Economic stability of
the markets in the
countries affects use of
credits.
International agreements
encourage the use of
credits.
The language of the
bank that open the credit
has big effect on
opening letter of credit.
All paragraphs
2
3
4
5
6
7
The
arithmetic
mean
3.38
The
relative
mean
67.50
The
value of
the test
2.490
3.75
75.00
3.85
P-value Ranking
(Sig.)
* 0.009
6
5.278
* 0.000
4
77.00
5.512
* 0.000
3
3.63
72.50
4.900
* 0.000
5
4.35
87.00
12.894
* 0.000
1
3.88
77.50
5.895
* 0.000
2
2.90
58.00
-0.585
0.281
7
3.68
73.50
9.217
* 0.000
The arithmetic mean statistically significant at the level of significance α= 0.05
Table (3-20) show us the follows

The arithmetic mean of the fifth paragraph "Economic stability of the markets in
the countries affects use of credits" equal 4.35 that’s mean the relative mean
equal 87.00% , and Sig. equal 0.000 so that this paragraph consider statistically
significant at the level of significance α = 0.05 , which shows that the average
degree of response to this paragraph has increased on the degree of neutrality
33


which is 3, and this means there is approval by the sample members to this
paragraph.
The arithmetic mean of the seventh paragraph "The language of the bank that
open the credit has big effect on opening letter of credit" equal 2.90 that’s mean
the relative mean equal 58.00%, and Sig. equal 0.281 so that this paragraph
consider statistically significant at the level of significance α = 0.05, which
shows that the average degree of response to this paragraph does not differ
substantially from the degree of neutrality which is 3.
In general we can say that the relative mean to all paragraphs of the axis is equal
73.50% , and Sig. equal 0.000 so that the axis is statistically significant at the
level of significance α = 0.05 , that's mean the average degree of response to this
axis has increased from a neutral 3, this means that there is approval by the
respondents on this area.
Result of the hypothesis
The nationality of the bank affect on the problems of letter of credit issued from the
perspective of Palestinian importers.
3.2.3.4 The third hypothesis: Capital owned by the person who asked
to open letter of credit affect on the problems of letters of credit issued
from the perspective of Palestinian importers.
T test was used to determine whether the average degree of response had reached a
degree of neutrality or not and this degree Is 3 . the Results as the follows:
Table (3-21)
The arithmetic mean and the value of the probability (Sig.) Each paragraph of the
third axis
No.
Paragraph
The
arithmetic
mean
The
relative
mean
The
value of
the test
1
The size of capital has
direct
relationship
about the letters of
credit problems.
3.93
78.50
6.586
* 0.000
2
2
Large amount of capital
facilitates the process
of opening credits.
4.23
84.50
11.743
* 0.000
1
34
P-value Ranking
(Sig.)
3
Large amount of capital
reduces the need for
credit enhancement.
3.10
62.00
0.488
0.314
4
4
Sources for obtain
funding
for
the
company affect the
ease of opening credit.
3.38
67.50
2.490
* 0.009
3
5
Method of calculating
profits have an impact
on the use of credits.
2.95
59.00
-0.443
0.330
5
6
Letters of credit reduce
the opportunities of
investment.
2.08
41.50
-4.765
* 0.000
6
3.28
65.50
3.287
* 0.001
All paragraphs
The arithmetic mean statistically significant at the level of significance α= 0.05
Table (3-21) show us the follows



The arithmetic mean of the second paragraph "Large amount of capital
facilitates the process of opening credits" equal 4.23 that’s mean the relative
mean equal 84.50% , and Sig. equal 0.000, so that this paragraph consider
statistically significant at the level of significance α = 0.05, which shows that the
average degree of response to this paragraph has increased on the degree of
neutrality which is 3, and this means there is approval by the sample members to
this paragraph.
Arithmetic mean of the sixth paragraph "Letters of credit reduce the
opportunities of investment" equal 2.08 that’s mean the relative mean equal
41.50%, and Sig. equal 0.000 so that this paragraph consider statistically
significant at the level of significance α = 0.05 that's mean the average degree of
response to this paragraph was decrease on the degree of neutrality which is 3,
and that's mean there is unacceptable by the respondents to this paragraph
In general we can say that the relative mean to all paragraphs of the axis is equal
73.50% , and Sig. equal 0.000 so that the axis is statistically significant at the
level of significance α = 0.05, that's mean the average degree of response to this
axis has increased from a neutral 3, this means that there is approval by the
respondents on this area.
Result of the hypothesis
Capital owned by the person who asked to open letter of credit affect on the problems of
letters of credit issued from the perspective of Palestinian importers.
35
3.2.3.5 The fourth hypothesis: Beneficiary of the letter of credit affects
on the problems of letter of credits issued from the perspective of
Palestinian importers.
T test was used to determine whether the average degree of response had reached a
degree of neutrality or not and this degree Is 3 . the Results as the follows:
Table (3-22)
The arithmetic mean and the value of the probability (Sig.) Each paragraph of the
fourth axis
No.
Paragraph
The
arithmetic
mean
The
relative
mean
The
value of
the test
1
There
is
no
correspondent banks to
local banks in the
exporting country.
3.15
63.00
0.758
0.227
4
2
Not accurately determine
the specifications of the
goods.
3.65
73.00
4.106
* 0.000
2
3
Provisioning
and
reserves have an impact
on the use of credits.
3.25
65.00
1.759
* 0.043
3
4
The legal form to the
beneficiary affect on the
possibility of opening
the credit.
3.80
76.00
5.731
* 0.000
1
5
The nationality of the
beneficiary affect on the
possibility of opening
credit.
2.88
57.50
-0.696
0.245
5
3.35
66.90
3.895
* 0.000
All paragraphs
The arithmetic mean statistically significant at the level of significance α= 0.05
36
P-value Ranking
(Sig.)
Table (3-22) can be derived as follows



The arithmetic mean of the fourth paragraph "The legal form to the beneficiary
affect on the possibility of opening the credit" equal 3.80 that’s mean the relative
mean equal 76.00%, and Sig. equal 0.000, so that this paragraph consider
statistically significant at the level of significance α = 0.05, which shows that the
average degree of response to this paragraph has increased on the degree of
neutrality which is 3, and this means there is approval by the sample members to
this paragraph.
The arithmetic mean of the fifth paragraph "The nationality of the beneficiary
affect on the possibility of opening credit" equal 2.88 that’s mean the relative
mean equal 57.50%, and the Sig. equal 0.245 so that this paragraph consider
statistically significant at the level of significance α = 0.05 , which shows that
the average degree of response to this paragraph does not differ substantially
from the degree of neutrality which is 3.
In general we can say that the relative mean to all paragraphs of the axis is equal
to 66.90% , and Sig. equal 0.000, so that the axis is statistically significant at the
level of significance α = 0.05, that's mean the average degree of response to this
axis has increased from a neutral 3, this means that there is approval by the
respondents on this area.
Result of the hypothesis
Beneficiary of the letter of credit affects on the problems of letter of credits issued from
the perspective of Palestinian importers.
37
3.2.3.6 The fifth hypothesis: The currency that will be paid affect on
the problems of letter of credits issued from the perspective of
Palestinian importers.
T test was used to determine whether the average degree of response had reached a
degree of neutrality or not and this degree Is 3 . the Results as the follows:
Table (3-23)
The arithmetic mean and the value of the probability (Sig.) Each paragraph of the
fifth axis
No.
Paragraph
The
arithmetic
mean
The
relative
mean
The
value of
the test
1
Changing exchange rates
lead to losses and an
increase in costs.
4.00
80.00
8.421
* 0.000
1
2
The
opening
credits
without a currency of the
company caused problems
in the payment of the
credits.
3.28
65.50
1.536
0.066
5
3
High banks commissions
in the foreign country.
3.30
66.00
2.399
* 0.011
4
4
Financial
risk
management and price
fluctuations
have
an
impact on the use of
credits.
3.98
79.50
8.034
* 0.000
3
5
Manage the movement of
Cash flow has an impact
on the use of credits.
4.00
80.00
8.062
* 0.000
1
3.71
74.20
7.815
* 0.000
All paragraphs
P-value Ranking
(Sig.)
* The arithmetic mean statistically significant at the level of significance α= 0.05
38
Table (23.3) show us the follows



The arithmetic mean of the first paragraph "Changing exchange rates lead to
losses and an increase in costs" equal 4.00 that’s mean the relative mean equal
80.00%, and Sig. equal 0.000, so that this paragraph consider statistically
significant at the level of significance α = 0.05, which shows that the average
degree of response to this paragraph has increased on the degree of neutrality
which is 3, and this means there is approval by the sample members to this
paragraph.
The arithmetic mean of the second paragraph, "the opening letters of credits
without a currency of the company creates problems in the payment of letter of
credit" equal 3.28 that’s mean the relative mean equal 65.50%, and the Sig.
equal 0.066, so that this paragraph consider statistically significant at the level
of significance α = 0.05 , which shows that the average degree of response to
this paragraph does not differ substantially from the degree of neutrality which
is 3.
In general we can say that the relative mean to all paragraphs of the axis is equal
74.20% , and Sig. equal 0.000, so that the axis is statistically significant at the
level of significance α = 0.05, that's mean the average degree of response to this
axis has increased from a neutral 3, this means that there is approval by the
respondents on this area.
Result of the hypothesis
The currency that will be paid affect on the problems of letter of credits issued from the
perspective of Palestinian importers.
39
Chapter 4
Results, Recommendations and The proposed studies
4.1 Results
1. Answers were analyzed, and through them shows that there are problems in
making the letters of credit, but medium in general, where the arithmetic mean
of all the paragraphs of the first hypothesis is 77%, indicating the approval of the
respondents on the existence of the problems of the letters of credit.
2. The Israeli occupation has a big role in the existence of the credits problems,
where the Israeli occupation create obstacles to Palestinian importer and push
the Palestinian economy towards the illogical through a policy of closure,
leading to dump the market with smuggled goods also responses showed in the
fourth paragraph of the first hypothesis, where the arithmetic mean 4.58 rate the
approval of 91%.
3. Form of ownership affects the problems of the letters of credit, but in a low
degree, where the number of partners appropriate with the problems of the
credits inversely.
4. The nationality of the bank which open the credit has the effect in the presence
of the problems of the issued credits, where the international conventions help to
facilitate the banking procedures and to reduce the letters of credit problems,
also the economic stability in the country of the bank which opened the credit
helps to facilitate the procedures of the credit, where the Palestinian importer
showed there approval at percentage of 87%.
5. Companies that have big capital face less problems and that’s due to the highconfidence granted by banks to large companies, thus no encourage to the small
companies in importing or increase the producing.
6. The beneficiary of the credit affect on the problems of issued letters of credit
from the viewpoint of Palestinian importers, where the difficulty of determining
the goods in the letter of credit is one of credit problems where leads to
problems between the importer and exporter and the need for settlement and
concessions.
7. The currency has a significant impact on the problems of letters of credit and the
researchers finds that the reason for this is due to the great change that occurs
consistently on the Israeli shekel, which is the largest currency trading in
Palestine, as well as the fluctuation of the dollar exchange rate.
8. The letters of credit have less risk for sellers and more risk to buyers.
40
The problems facing the Palestinian importer
1. Increasing the import costs.
2. Low value of the goods because of the delay period because of the duration to
make letter of credit.
3. Expiration date of the validity of some goods because of the delay.
4. The problem of insurance required by the banks.
5. Conditions necessary to back down from credit or part of the are difficult and
requiring difficult action.
6. There are problems at the time of transfer of ownership between the importer
and exporter.
7. The large number of certificates and documents required by banks.
8. Currency fluctuations.
9. Increasing expenses: Insurance expense, e-mail expense, fees expense ….
4.2 Recommendations
1. Banks are demanding for greater attention to letters of credit through making a
system that is easier, faster and better to make the letter of credit.
2. The process of determining the costs required for the letter of credit must be
given more accurately, and also the costs required for the modification.
3. Make courses are special for letters of credit, which include staff in banks and
also the merchants.
4. Work to reduce the required papers and documents to speed the credit process.
5. Work to reduce expenses through the use of modern communications and the
Internet, where it became the modern outlook of the trade in general and in
particular for letters of credit, require to make a the letter of credit electronically
and more easily.
6. Work on the management of the finance strategically and high logically.
7. Work on the exploitation of investment opportunities, where the percentage of
the credit settlement be on different batches and at intervals, and can take
advantage of this opportunity so as to increase investment.
8. The use of fiscal and monetary policy for the organization of the Palestinian
economy and encourage investment.
9. The establishment of an economic entity can be a president of the conclusion of
agreements with States in order to facilitate the import and increase the
development of the process of the letters of credit procedures.
10. To reduce the problems affecting small business owners for insurance, we
recommend to reduce these insurances.
11. Enhance the confidence in the Palestinian importer about the banking services.
12. Palestinian banks enter the financial markets, the global monetary and overcome
the Israeli bank, and therefore overcome the Palestinian banks as an agent for
Israeli banks, also reduce the costs of opening the letter of credit.
41
4.3 The proposed studies
1.
2.
3.
4.
The role of the national economy in promotion the International Trade.
The quality of the Palestinian banking services.
Credit services in the Palestinian banks.
The possibility of making the credit through the website of the banks.
42
References
1- Abo AL-Rab, "Problems of letters of credit issued-credits imports-facing the
Palestinian importer" Palestine, Gaza, IUG, Master degree, 2000.
2- Abu Muammar, F. "The role of banks in investing in Palestine for the period
between 1999 - 2000", Journal of the Islamic University, The tenth volume, The first
edition, 2002.
3- Al-Faleit, k. "the effect of banking facilities to the various sectors of the economy"
Palestine, Gaza, IUG, Master degree, 2004.
4- Ashour, Y. "Prospects for the Palestinian banking system", Palestine Gaza, Rantisi
for Printing and Publishing, 2002.
5- Diab, H. "Commercialletters of credit", Lebanon, Beirut, The institutionof
theuniversitystudies, publishing and distribution, 1999.
6- Foley, C. Fritz, "A Study of International Trade Finance Practices", Harvard
University, Department of Economics, National Bureau of Economic Research
(NBER), 2011.
7- Othman, S. "The Letters of Credit", Egypt, Alexandria, AlDar Aljamaia, 2005.
8- Said, S. "The contractual relationshipbetween the parties of the letter of the credit
contract", Master thesis, 2007.
9- Shahen, A. "Banking operations inbanks andIslamic banks", Palestine, Gaza,
university studentlibrary, 2006.
10- Sisi, H. "Contemporary banking issues", Egypt, Cairo, Dar Alfekr Alarabi, 2004.
11- SITPRO, "Simplifying International Trade, Report on The Use of Export Letters
of Credit", 2002.
12- "United Nations Convention on Independent Guarantees and Stand-By Letters of
Credit" Article 2. Undertaking,
13- Zayda, D. "The distressed credit facilities in the Palestinian banking system"
Palestine, Gaza, IUG, Master degree, 2006.
14- http://www.law.cornell.edu/ucc/5/5-103.html
43
Appendix
44
Islamic University
Faculty of Commerce
Accounting Department
Dear Mr.\
After the greeting:
Researchers are studying to complete the requirements for obtaining a bachelor's
degree in Accounting, Faculty of Commerce, Islamic University, which is entitled "The
Letter of Credit Problems that’s Influencing on the Palestinian Importer in Gaza Strip".
As we put between your hands this questionnaire We ask you to provide assistance, by
answering the paragraphs questionnaire accurately and objectively, because of their
significant impact in getting positive results, note that everything will be in your answer
will be respected and will be used only for the purposes of scientific research, and it
does not need to write the name or any information indicating on yourself.
Thank you for your cooperation
Researchers:
Anas Rashed
Bilal Al-Muhtadi
Amjad Jaber
45
Section I: Please mark (√) in front of the appropriate answer:
First: general information about the person respondent on the company:
1- Qualification:
□ Bachelor.
□ Master.
□ Doctorate.
□ Other.
2- Specialization:
□ Accounting.
□ Economics.
□ Financial and Banking Sciences.
□ Other.
3- Job Title:
□ Head of Accounting department.
□ Trader.
□ Accountant.
□ Other.
Second: private information about the company which opened the credit:
1- Years of dealing in the letters of credit:
□ Less than 5 years.
□ From 5 to less than 10 years.
□ From 10 to less than 15 years.
□ 15 years and over.
2- Form of ownership of the company:
□ Individual company.
□ Partnership.
□ Private shareholding company.
□ Public shareholding company.
3- The nationality bank which opened the credit:
□ Domestic.
□ Israeli.
□ Jordanian.
□ Foreign.
4- The size the company's capital:
□ Less than $1,000.
□ From $100,000 to $250,000.
□ From $250,000 to $500,000.
□ More than $500,000.
5- The beneficiary of the credit:
□ Trader or a local factory.
□ Trader or Israeli factory.
□ Trader or Jordanian factory.
□ Trader or Foreign factory.
6- The currency used in the credit:
□ US dollar.
□ Jordanian Dinar.
□ Shekel.
□ Other.
46
Section II: consists of two parts:
First part: Letters of credit problems facing the Palestinian importer:
No.
Paragraph
Strongly
agree
1
2
3
4
Agree
Acceptance degree
Undecided Disagree
Strongly
disagree
The difficulty of
letters
of
credit
procedures.
Trend
to
import
through a low credit.
Problems
in
the
movement of the
crossings.
Dumping Markets of
smuggled goods .
Second part: Consists of five areas as follows:
First area: The impact of the form of ownership on the problems of letters of credit
issued from the perspective of Palestinian importers.
No.
Paragraph
Strongly
agree
1
2
3
4
5
Acceptance degree
Agree Undecided Disagree
Form of ownership
affects the cost of
opening letter of
credit.
The presence of the
regulatory system in
the
company
contributes in the
increasing of using
the letters of credit.
Whenever
the
number of partners
increase, dealing in
the
credit
also
increase.
The terms of the
company limit the
use of credits.
Limitation
of
Liability
in
the
company increases
the use of credits.
47
Strongly
disagree
Second area: The impact of the nationality of the bank which opened the credit on
the problems of letters of credit issued from the perspective of Palestinian
importers.
No.
Paragraph
Strongly
agree
1
2
3
4
5
6
7
Acceptance degree
Agree Undecided Disagree
Strongly
disagree
The nationality of
the bank affect on
the
duration
of
receiving
and
shipping the goods
Insurance required
by the banks is very
high
the foreign banks
demand to promote
credit
Nationality of the
bank affects the ease
of the letters of
credit procedures.
Economic stability
of the markets in the
countries affects use
of credits.
International
agreements
encourage the use of
credits.
The language of the
bank that open the
credit has big effect
on opening letter of
credit.
Third area: The impact of capital applicant to open the credit on the problems of
letters of credit issued from the perspective of Palestinian importers.
No.
Paragraph
Strongly
agree
1
Acceptance degree
Agree Undecided Disagree
The size of capital
has
direct
relationship
about
the letters of credit
problems.
48
Strongly
disagree
2
3
4
5
6
Large amount of
capital facilitates the
process of opening
credits.
Large amount of
capital reduces the
need
for
credit
enhancement.
Sources for obtain
funding
for
the
company affect the
ease of opening
credit.
Method
of
calculating
profits
have an impact on
the use of credits.
letters
of credit
reduce
the
opportunities
of
investment.
Fourth area: The impact of the beneficiary of the credit on the problems of letters
of credit issued from the perspective of Palestinian importers.
No.
Paragraph
Strongly
agree
1
2
3
4
5
Acceptance degree
Agree Undecided Disagree
There
is
no
correspondent banks
to local banks in the
exporting country.
Not
accurately
determine
the
specifications of the
goods.
Provisioning
and
reserves have an
impact on the use of
credits.
The legal form to the
beneficiary affect on
the possibility of
opening the credit.
The nationality of
the beneficiary affect
on the possibility of
opening credit.
49
Strongly
disagree
Fifth area: The impact of the currency that will be paid by on the problems of
letters of credit issued from the perspective of Palestinian importers.
No.
Paragraph
Strongly
agree
1
2
3
4
5
Acceptance degree
Agree
Undecided Disagree
Changing exchange
rates lead to losses
and an increase in
costs.
The opening credits
without a currency
of the company
caused problems in
the payment of the
credits.
High
banks
commissions in the
foreign country.
Financial
risk
management
and
price fluctuations
have an impact on
the use of credits.
manage
the
movement of Cash
flow has an impact
on the use of
credits.
Greetings Researchers:
Anas Rashed
Bilal Al-Muhtadi
Amjad Jaber
50
Strongly
disagree
‫الجـامعة االسالمية‬
‫كلية التجــارة‬
‫قسم المحاسبة‬
‫السيد‪/‬ة ‪ .....................‬المحترم‬
‫تحية طيبة وبعد‪:‬‬
‫يقوم الباحثون بدراسة الستكمال متطلبات الحصول على درجة البكالوريوس في المحاسبة‬
‫بكلية التجارة بالجامعة اإلسالمية‪ ،‬وهي بعنوان "مشكالت االعتمادات المستندية الصادرة التي تواجه‬
‫المستورد الفلسطيني"‪.‬‬
‫ونحن إذ نضع بين أيديكم هذه االستبانة راجين منكم تقديم المساعدة‪ ،‬وذلك باإلجابة عن فقرات‬
‫االستبانة بدقة وموضوعية‪ ،‬لما لها من أثر كبير في الحصول على نتائج إيجابية‪ ،‬علماً أن كل ما‬
‫سيرد في إجابتكم سيكون موضع احترام ولن يستخدم إال ألغراض البحث العلمي فقط‪ ،‬وعليه ال‬
‫داعي لكتابة االسم أو أي معلومات تدل على شخصكم الكريم‪.‬‬
‫شاكرين لكم حسن تعاونكم‬
‫الباحثون‬
‫أنس راشد‬
‫بالل المهتدي‬
‫أمجد جبر‬
‫‪51‬‬
‫القسم األول‪ :‬أرجو وضع عالمة (√) أمام اإلجابة المناسبة‪:‬‬
‫أولا‪ :‬معلومات عامة بالشخص المستجيب عن الشركة‪:‬‬
‫‪ (1‬المؤهل العلمي‪:‬‬
‫□ بكالوريوس‪.‬‬
‫□ ماجستير‪.‬‬
‫□ دكتوراه‪.‬‬
‫□ أخرى‪.‬‬
‫‪ (2‬التخصص‪:‬‬
‫□ اقتصاد‪.‬‬
‫□ محاسبة‪.‬‬
‫□ أخرى‪.‬‬
‫□ علوم مالية ومصرفية‪.‬‬
‫‪ (3‬المسمى الوظيفي‪:‬‬
‫□ تاجر‪.‬‬
‫□ رئيس قسم الحسابات‪.‬‬
‫□ أخرى‪.‬‬
‫□ محاسب‪.‬‬
‫ثانيا‪ :‬معلومات خاصة بالشركة فاتحة العتماد‪:‬‬
‫‪ (1‬سنوات التعامل بالعتمادات المستندية‪:‬‬
‫□ أقل من ‪ 5‬سنوات‪.‬‬
‫□ من ‪ 5‬سنوات إلى أقل من ‪ 10‬سنوات‪.‬‬
‫□ ‪ 15‬سنة فأكثر‪.‬‬
‫□ من ‪ 10‬سنوات إلى أقل من ‪ 15‬سنة‪.‬‬
‫‪ (2‬شكل ملكية الشركة‪:‬‬
‫□ شركة تضامنية‪.‬‬
‫□ ملكية فردية‪.‬‬
‫□ مساهمة عامة‪.‬‬
‫□ مساهمة خاصة‪.‬‬
‫‪ (3‬جنسية البنك فاتح العتماد‪:‬‬
‫□ محلي‪.‬‬
‫□ إسرائيلي‪.‬‬
‫□ أردني‪.‬‬
‫□ أجنبي‪.‬‬
‫‪ (4‬حجم رأس مال الشركة‪:‬‬
‫□ أقل من ‪ 100‬ألف دوالر‪.‬‬
‫□ من ‪ 100‬ألف – إلى أقل من ‪ 250‬ألف‪.‬‬
‫□ من ‪ 251‬ألف – إلى أقل من ‪ 500‬ألف دوالر‪.‬‬
‫□ أكثر من ‪ 500‬ألف دوالر‪.‬‬
‫‪ (5‬المستفيد من العتماد‪:‬‬
‫□ تاجر أو مصنع محلي‪.‬‬
‫□ تاجر أو مصنع إسرائيلي‪.‬‬
‫□ تاجر أو مصنع أردني‪.‬‬
‫□ تاجر أو مصنع أجنبي‪.‬‬
‫‪ (6‬نوع العملة المستخدمة في العتماد‪:‬‬
‫□ دوالر‪.‬‬
‫□ دينار‪.‬‬
‫□ شيكل‪.‬‬
‫□ أخرى‪.‬‬
‫‪52‬‬
‫القسم الثاني‪ :‬ويتكون من مجالين‪:‬‬
‫المجال األول‪ :‬بيان مشكالت االعتمادات المستندية التي تواجه المستورد الفلسطيني‪.‬‬
‫أوافق بدرجة‬
‫عالية جداً‬
‫‪3‬‬
‫اضطراب حركة المعابر‪.‬‬
‫‪4‬‬
‫إغراق األسواق بالبضائع المهربة‪.‬‬
‫عالية‬
‫‪2‬‬
‫االتجاه إلى االستيراد بوسائل ائتمان منخفضة‪.‬‬
‫متوسطة‬
‫‪1‬‬
‫صعوبة إجراءات عملية االعتمادات المستندية‪.‬‬
‫قليلة‬
‫الرقم‬
‫قليلة جداً‬
‫الفقرة‬
‫المجال الثاني‪ :‬ويتكون من خمسة محاور كما يلي‪:‬‬
‫‪ ‬المحور األول‪ :‬أثر شكل الملكية على مشكالت االعتمادات المستندية الصادرة من وجهة‬
‫نظر المستوردين الفلسطينيين‪.‬‬
‫أوافق بدرجة‬
‫عالية جداً‬
‫‪2‬‬
‫االعتمادات المستندية‪.‬‬
‫‪3‬‬
‫كلما كان عدد الشركاء أكثر يزيد التعامل باالعتمادات‪.‬‬
‫‪4‬‬
‫شروط عقد الشركة تحد من استخدام االعتمادات‪.‬‬
‫‪5‬‬
‫حدود المسئولية في الشركة يزيد من استخدام االعتمادات‪.‬‬
‫‪53‬‬
‫عالية‬
‫وجود النظام الرقابي في الشركة يساهم في زيادة استخدام‬
‫متوسطة‬
‫‪1‬‬
‫يؤثر شكل الملكية على تكاليف فتح االعتماد المستندي‪.‬‬
‫قليلة‬
‫قم‬
‫قليلة جداً‬
‫الر‬
‫الفقرة‬
‫‪ ‬المحور الثاني‪ :‬أثر جنسية البنك فاتح االعتماد على مشكالت االعتمادات المستندية‬
‫الصادرة من وجهة نظر المستوردين الفلسطينيين‪.‬‬
‫أوافق بدرجة‬
‫عالية جداً‬
‫‪3‬‬
‫مطالبة البنوك األجنبية بتعزيز االعتمادات‪.‬‬
‫‪4‬‬
‫جنسية البنك يؤثر على سهولة إجراءات االعتمادات‬
‫المستندية‪.‬‬
‫االستقرار االقتصادي لألسواق في الدول يؤثر على استخدام‬
‫‪5‬‬
‫االعتمادات‪.‬‬
‫‪6‬‬
‫االتفاقات الدولية تشجع على استخدام االعتمادات‪.‬‬
‫‪7‬‬
‫عالية‬
‫‪2‬‬
‫التأمينات التي تطلبها البنوك عالية جداً‪.‬‬
‫متوسطة‬
‫‪1‬‬
‫جنسية البنك يؤثر على مدة استالم البضاعة وشحنها‪.‬‬
‫قليلة‬
‫قم‬
‫قليلة جداً‬
‫الر‬
‫الفقرة‬
‫لغة البنك فاتح االعتماد في دولة المصدر لها تأثير على فتح‬
‫االعتمادات‪.‬‬
‫‪ ‬المحور الثالث‪ :‬أثر رأس مال طالب فتح االعتماد على مشكالت االعتمادات المستندية‬
‫الصادرة من وجهة نظر المستوردين الفلسطينيين‪.‬‬
‫عالية جداً‬
‫‪54‬‬
‫عالية‬
‫‪2‬‬
‫كبر حجم رأس المال يسهل عملية فتح االعتمادات‪.‬‬
‫متوسطة‬
‫‪1‬‬
‫حجم رأس المال له عالقة مباشرة بمشكالت االعتمادات‪.‬‬
‫قليلة‬
‫قم‬
‫الفقرة‬
‫قليلة جداً‬
‫الر‬
‫أوافق بدرجة‬
‫‪3‬‬
‫كبر حجم رأس المال يقلل من الحاجة إلى تعزيز االعتمادات‪.‬‬
‫مصادر الحصول على التمويل المالي للشركة يؤثر على‬
‫‪4‬‬
‫سهولة فتح االعتماد‪.‬‬
‫‪5‬‬
‫طريقة احتساب األرباح لها تأثير على استخدام االعتمادات‪.‬‬
‫‪6‬‬
‫االعتمادات المستندية تقلل من فرص االستثمار‪.‬‬
‫‪ ‬المحور الرابع‪ :‬أثر المستفيد من االعتماد على مشكالت االعتمادات المستندية الصادرة‬
‫من وجهة نظر المستوردين الفلسطينيين‪.‬‬
‫أوافق بدرجة‬
‫عالية جداً‬
‫تكوين المخصصات واالحتياطات له تأثير على استخدام‬
‫‪3‬‬
‫االعتمادات‪.‬‬
‫‪4‬‬
‫يؤثر الشكل القانوني للمستفيد على إمكانية فتح االعتماد‪.‬‬
‫‪5‬‬
‫تؤثر جنسية المستفيد على إمكانية فتح االعتماد‪.‬‬
‫‪55‬‬
‫عالية‬
‫‪2‬‬
‫عدم تحديد مواصفات البضاعة بدقة‪.‬‬
‫متوسطة‬
‫‪1‬‬
‫عدم وجود بنوك مراسلة للبنوك المحلية في بلد المصدر‪.‬‬
‫قليلة‬
‫قم‬
‫قليلة جداً‬
‫الر‬
‫الفقرة‬
‫‪ ‬المحور الخامس‪ :‬أثر العملة التي سيتم الدفع بها على مشكالت االعتمادات المستندية‬
‫الصادرة من وجهة نظر المستوردين الفلسطينيين‪.‬‬
‫أوافق بدرجة‬
‫عالية جداً‬
‫عالية‬
‫متوسطة‬
‫‪1‬‬
‫قليلة‬
‫قم‬
‫قليلة جداً‬
‫الر‬
‫الفقرة‬
‫تغير أسعار العمالت يؤدي إلى خسائر وزيادة في التكاليف‪.‬‬
‫فتح االعتمادات بغير عملة الشركة تسبب مشاكل في تسديد‬
‫‪2‬‬
‫االعتمادات‪.‬‬
‫‪3‬‬
‫ارتفاع عموالت البنوك في البلد األجنبي‪.‬‬
‫إدارة المخاطر المالية وتقلبات األسعار له تأثير على استخدام‬
‫‪4‬‬
‫االعتمادات‪.‬‬
‫‪5‬‬
‫إدارة حركة انسياب النقد له تأثير على استخدام االعتمادات‪.‬‬
‫مع تحيات الباحثين‬
‫أنس راشد‬
‫بالل المهتدي‬
‫أمجد جبر‬
‫‪56‬‬