ANALYSIS OF FUND MANAGEMENT IN PROVIDING A SOUND BANKING SYSTEM IN NIGERIA (A CASE STUDY OF UNION BANK PLC)
ABSTRACT
INTRODUCTION
The researcher Study ‘’analysis of funds management in providing a sound banking system in Nigeria’’ with special focus on union bank of Nigeria plc. Has been chosen to enable the researcher of explore into and creditability of commercial bank. The importance and economic relevance of fund management in commercial bank in Nigeria in the growth and development of a nation can not be underrated. The central bank of Nigeria is a federal government bank. It is refereed to as the father of all banks in the country as it is responsible for issuing currencies and regulating country’s monetary policies. The Nigeria commercial banks are controlled by the central bank through its clearing houses. A system by which inter-bank, in- datedness is settled. There are twenty five banks in Nigeria with commercial banks in Nigeria carryout other banking functions, they concentrate mostly on deposit banking. The management of fund in commercial banks with particular reference to union banks of Nigeria plc is the topic review in the project. They make up of the films, capital structure. The management of fund, motive of holding money, the firm financial statement to outsiders and its operations are the subject matter of the review.
RESEARCH QUESTIONS
The project work is intended to review the management of funds of commercial banks with particular reference of union banks of Nigeria plc..
As a result of this, the following question arise.
1. What are the bank’s sources capital of fund?
2. What constitute the bank’s capital structure?
3. How does the bank manage its cash?
4. What are the functions of the banks regarding cash management?
5. What is the economic importance of bank?
6. What are the other kinds of service rendered by the bank?
7. What are the effects of environmental and structural change?
THE OBJECTIVES OF THE STUDY
The objectives of the study are as follows’.-
1. To define the terms ‘’fund management’’
2. To identify the function of commercial banks.
3. To critically examine fund management in commercial banks.
4. To appraise the problems encountered by banks in the management of its fund.
5. To ascertain roles of commercial banks in business development.
6. To make recommendation as to how commercial banks can manage it funds prudently.
RESEARCH HYPOTHESIS
In the course of this research work, the following hypothesis will be tested.
HO; Analysis of fund management does not bring about efficient use of limited resource and sound banking system in the environment.
HI; Analysis of fund management in providing a sound banking system in Nigeria will bring about efficient us of a limited system resources and sound banking in the environment.
SIGNIFICANCE OF THE STUDY
It is imperative to mention here that the topic analysis of fund management’’ is a are topic.
This write up will help to receive the mind rating managers the importance of management of funds.
SCOPE AND LIMITATION OF THE STUDY
The scope of the study is to carry out an in-dept investigation unto fund management in Nigeria commercial banks using union bank plc as case management.
The limitation of this work therefore is in accessibility to records especially those result that relate to figure and fact as they are regarded as confidential coupled with the poor responses and attitudes to some of the staff of the banks.
DEFINITION OF KEY TERM
MANAGEMENT ;. This term is used here in relation to fund it includes the process of safe-guarding cash, controlling cash and market able securities fore-casting cash requirement as well as appraisal of investment opportunities for cash and research items towards generating more profit.
CASH;. It defined as money or legal tender that constitute negotiable instrument which could be used to settle any contractual obligation fund and cash can be used inter change ably.
CHEQUE;. A cheque is an unconditional order in writing where by a person instruct his bankers to pay on demand a stated sum of money from his current account to a named person.
LIQUIDITY;. This is the nearness to cash of assets, it is the state of being able to raise fund easily be selling off the assets of company.
FLOAT TIME;. This the length of time necessary for a cheque to make its way from the issue to the payer back, the clearing process until the cheque is charge against the issuing account.
SOLVENCY;. This is the ability to meet debt payment on due dates by having money available in from of cash.
BANK DRAFT;. These are bill of exchange by one banker to another, they from a convenient means of remitting money.
OVER DRAFT ;. This is the amount granted to a customer by the bank. The customer drawn more than what is inside his account.
BILL OF EXCHANGE ;. It is an unconditional order in writing addressed by one person to another, signed by the person giving it requiring the person whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain of money to or the order of a specified person.
DORMANT ACCOUNT; This is an account which has not been operated for long (one year and above ) no operation will be all owned on it including payment of interest until it is reactivated with an explanation to the bank by the customer.
CERTIFIED CHEQUE; The cheque issues by the bank to a customer on demand with the work ‘’certified payment of the cheque is contain.
MAIL AND TELEGRAPHIC TRANSFERS; These means of remitting fund from bank to another in a different location.
BANKERS PAYMENT;. This is an instrument used to set the inter bank payment within the same clearing town. It is usually presented throughout clearing house .
FUNDS;. The term fund can be derived in there ways means;.
i. Cash
ii. Working capital (difference between current assets and current liability).
ii. Finance resources (arising from both current and non current assets).
ORGANIZATION OF THE STUDY
The study is divided into five chapters, one is the introduction which contains background, statement of the problem, objectives, significance of the study, research question, scope, organization of the study, Definition of the key term.
Chapter two: it deals with literature review
Chapter three deals with the research methodology
Chapter four: this is the data presentation and analysis
Chapter five: this consist of the summary, conclusion, and recommendations.
TABLE OF CONTENT
Title Page i
Certification ii
Dedication iii
Acknowledgements iv
Proposal vi
Table of contents xiii
CHAPTER ONE: INTRODUCTION
1.1 Background to the study 1
1.2 Statement of the research 1
1.3 Research Question 2
1.4 Objectives of the study 2
1.5 Research hypothesis 3
1.6 Significance of the study 4
1.7 Scope and limitation of the study 4
1.8 Definition of key Terms 5
1.9 Organization of the study6
CHAPTER TWO: LITERATURE REVIEW
2.1 Literature Review 8
2.2 Meaning of Fund Management 9
2.3 Cash planning 10
2.4 Cash budget11
2.5 Functions of Commercial Bank 12
2.6 Cash Balance Required13
2.7 Cash Balance to Current assets Ratio 14
2.8 Facts of cash management15
2.9 Need for Holding cash 17
2.10 The creation of fund by money Deposit Bank 19
2.11 Quantities Associated with credit 20
2.12 Commercial bank and Economic Development 21
2.13 Investment of Excess cash 22
2.14 Internal control of cash 23
2.15 Limitation of credit creation 24
CHAPTER THREE:
3.0 Research Methodology 26
3.1 Research design26
3.2 Sources of data collection 28
3.3 Population and sample size28
3.4 Sampling technique 29
3.5 Method of data analysis 29
3.6 Limitation of the study 29
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 Data presentation 30
4.2 Data analysis 31
4.3 Data interpretation 33
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS.
5.1 Summary 36
5.2 Conclusion 37
5.3 Recommendation 38
References
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The central Bank of Nigeria is a federal government bank. It is referred to as the father of all banks in the county as it is responsible for issuing currencies and regulating country’s monetary policies. The Nigeria commercial banks are controlled by the central bank through its clearing houses. A system by which inter-bank, in-datedness is settled. There are twenty five banks in Nigeria with commercial banks in Nigeria carryout other banking functions, they concentrate mostly on deposit banking.
The management of fund in commercial banks with particular reference to union banks of Nigeria plc is the topic review in the project. They make up of the firms, capital structure, the management of fund, motive of holding’ money, the firm financial statement to outsiders and its operations are the subject matter of the review.
1.2 STATEMENT OF THE RESEARCH PROBLEM
In this Era of bank distress, management of funds has been a matter of concern to banks, government and customers alike. The language of business is money and banks are the custodial of money.
Based on these parlances, it will not be out of time to conduct a research on fund management in commercial banks, using union bank plc as a case study.
1.3 RESEARCH QUESTIONS
The project work is intended to review the management of funds of commercial banks with particular reference of union banks of Nigeria plc.
As a result of this, the following question arise
1. What is the bank’s sources capital of fund?
2. What constitute the bank’s capital structure?
3. How does the bank manage its cash?
4. What are the functions of the banks regarding cash management?
5. What is the economic importance of bank?
6. What are the other kinds of service rendered by the bank?
7. What are the effects of environmental and structural change?
1.4 THE OBJECTIVES OF THE STUDY
The objectives of the study are as follows,;.
1. To define the term “fund management”
2. To identify’ the functions of commercial banks
3. To critically examine fund management in commercial banks
4. To appraise the problems encountered by banks in the management of its fund.
5. To ascertain roles of commercial banks in business development.
6. To make recommendation as to how commercial banks can manage it funds prudently.
1.5 RESEARCH HYPOTHESIS
In the course of this research work, the following hypotheses will be tested.
Hi: analysis of funds management does not bring about efficient use to limited resource and sound banking system in the environment.
Ho: analysis of fund management in providing a sound banking system in Nigeria will bring about efficient us of a limited resources and sound banking in the environment.
1.6 SIGNIFICANCE OF THE STUDY
It is imperative to mention here that the topic analysis of fund management” is a rare topic.
This write up will help to receive the mind rating managers the importance of management of funds.
The study will provides a frame work of knowledge that will assist the existing and potential commercial banks in Nigeria.
Commercial banks will find it useful in developing a good operations system of their banking activities. The knowledge of the study will not double contribute greatly to the much talked about economy as management of cash is a major factor in a country’s economy.
1.7 SCOPE AND LIMITATION OF THE STUDY TIME CONTRANT INADEAUTE FENL IMUFFICIENT DATA.
The scope of the study is to carry out an in-dept investigation, unto fund management in Nigeria commercial Banks using union bank plc as case management.
1.8 DEFINITION OF KEY TERM
• Management:- this term is used here in relation to fund it includes the process of safe-guarding cash, controlling cash and marketable securities fore-casting cash requirement as well as appraisal of investment opportunities for cash and research items towards generating more profit.
• Cash:- it is defined as money or legal tender that constitute negotiable instrument which could be used to settle any contractual obligation fund and cash can be used interchangeably.
. Cheque:- a cheque is an unconditional order in writing whereby a person instructs his bankers to pay on demand a stated sum of money from his current account to a named person.
• Liquidity: this is the nearness to cash of assets, it is the state of being able to raise fund easily be selling off the assets of company.
. Float time:-this is the length of time necessary for a cheque to make its way from the issue to the payer back, the clearing process until the cheque is charge against the issuing account.
• Solvency:- this is the ability to meet debt payment on due dates by having money available in from of cash.
Bank draft:-these are bills of exchange by one banker to another; they form a convenient means of remitting money.
⦁ Over draft:- this is the amount granted to a customer by the bank. The customer drawn more than what is inside his account.
⦁ Bill of exchange:- it is an unconditional order in writing addressed by one person to another, signed by the person giving it requiring the person whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain of money to or the order of a specified person.
• Dormant account:- this is an account which has not been operated for long (one year and above) no operation will be all owned on it including payment of interest until it is reactivated with an explanation to the bank by the customer.
• Certified cheque:-the cheque issued by the bank to a customer on demand with the work “certified payment f the cheque is contain.
1.9 ORGANIZATION OF THE STUDY
The study is divided into five chapters,;.
chapter one; is the introduction which contains background of the study, statement of the research, research question, objectives of the study, research hypothesis, significance of the study, scope and limitation of the study, definition of key terms and organization of the study.
Chapter two: is the literature review which contains literature review, meaning of fund management, cash planning, cash budget, functions of money deposit bank, cash balance required, cash balance to current ratio, facets of cash management, need for holding cash, the creation of fund by money deposit bank, quantities associated with credit, commercial bank and economic development, investment of excess cash, and internal control of cash and limitation of credit creation.
Chapter three:- is the research methodology which contain research design, sources of data collection, population and sample size, sampling technique, method of data analysis and limitation of the study.
Chapter four:-is the data presentation, analysis and interpretation which contains data presentation, data analysis and data interpretation.
Chapter five:-is the summary, conclusion and recommendations which contains summary, conclusion, recommendation.
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