CHAPTER ONETHE ROLE OF FINANCIAL INSTITUTIONS IN EXPORT FINANCING IN NIGERIAINTRODUCTION:Financial institutions are organizations which deal basically in money.`They constitute the financial framework of an economy. Financial institutions help to pool savings and excess liquidity from millions of individuals and firms within the country and make them available to those who need them for various purposes.Financial institutions include commercial bank (Joint stock banks) discount houses, the central bank, saving banks, development bank (BOI), insurance companies, hire purchase companies, the national providence fund, the stock exchange building etc.Before the introduction Nigeria export- import bank (NEXIM) in Nigeria as at 1999 the commercial banks were generally referred to retail bankers, while merchant banks were known as wholesale bankers.iiHowever the two operate and offer almost the same services that any line of demarcation is now rather fussy- one can only say that the distinguishing factor between the two sectors of the banking industry is that the commercial banks are members of the central bank of Nigeria (CBN) clearing house, While the merchant bank are not members of the Central Bank clearing house.Another contentious factor is the licence granted merchant banks to take companies to capital market which the Nigeria stock exchange denied the commercial licensed them to do so, the introduction of the universal banking system of divide effect. A trader could approach either commercial or merchant bank for financing facility for his transactions. They can provide both short and long term facilities and can design any product which meets any requirements of customers.The Nigeria export-import bank (NEXIM) was established in 1988 but commenced operations in January 1991. The bank was established to provide mainly short term financing for exporters who need working capital to buy hair activities. Among the function of the banks is the maintenance of a foreign exchange revolution fund whichiiis to be made available as loans to exporters who need to export machineries, raw materials and spare parts to satisfy export orders. It can also consider loans involving domestic trade which are likely to assist exports.1.1. BACKGROUND OF THE STUDYThe banking system has been integral part of the structural reforms and it has a leading role in management of policy change. The role of financial institutions in export financing is that of a cartelist and a committed broker. It ranges from assisting company and individual on how to enter export market through financing and handing shipping document and collect export proceedings.Generally an export can meet his financing needs in the following number of ways.1. advance payment from overseas buyers2. internal general funds3. Credit from bank and other financing institution.4. Credit provided by the government in the buyer country.