An Appraisal Of The Impact Of The Liquidity Problem On Selected Commercial Banks In Nigeria

Project and Seminar Topics with material for Banking and Finance

An Appraisal Of The Impact Of The Liquidity Problem On Selected Commercial Banks In Nigeria


Abstract


This study is on an appraisal of the impact of the liquidity problem on selected commercial banks in Nigeria. The total population for the study is 200 staff of first bank, Enugu state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up accountants, human resource managers, customer care officers and marketers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


Chapter One


Introduction

1.1 Background of the Study

As competition between businesses geared up, if becomes imperative to turn, attention to customers needs and wants which are naturally insatiable. The marketing concept arose to challenge all other previous concept. Orjih (1998) in his book “Seminar in Banking and finance.” Concluded that marketing concept holds the key to achieving organizational goals consists in determining the needs and wants of target markets and delivering the desired satisfaction more / effectively and efficiently than its competitions. The marketing concept is of frame of mind which the market focus, customer orientation coordinated marketing and profitability.

The marketing concepts starts with a well defined market, and the organization that determines who its markets will be, who he hopes to satisfy as concluded by Melver and Geoffrey (1980) in book “Marketing financial services.

By customer orientation, it implies that the customer’s need is defined from customer’s view point and not from the aspect of the company. The customers orientation seeks to crown the customers as “king” recognizing the fact that the customers is the life blood of an organization. A business man once said that “Our aim goes beyond satisfying the customers”. Coordinating marketing entails that all the various marketing function like, advertising, marketing research, sales forces and so on due properly integrated and must be well coordinated with other departments in the company. The companies are to make profit. A company will make more profit, if it satisfies its customer’s needs better than competitors. Therefore, in applying the marketing concept, companies would produce what the customers want, and by so doing, they maximize more profit.

Several authors have stated the need to adopt the marketing concept by the business entities. Kotler (1997) in his book “marketing management analysis, planning and control”.

Said that most companies do not really grasp or embrace the marketing concept until they are driven to it by circumstance like, sales dechine, slow growth, changing of buying patterns by the customers, increasing competition and increase in marketing expenditure. The emergence of banking industries and its services in Nigeria can be traced back to 100years ago. The activities of transactional corperation, the financial transactions of the colonial government the decline of the better system of trade and the increasing acceptance of British silver currency, all these required an institution in the form of a commercial banks for softy and transmission of funds, the importation and distribution of British silver coins and provision of credit to the government and trading companies who need the services of the banking industries. Banks were out to make profit interest gotten from the credits granted to these customers, without actually satisfying the customers. They never really thought of the customers as the life blood of the banking industries.

In the past, banks were operating in a seller’s market which made demarketing possible, but the environment is dynamic, such that if bank are taking place in industry and commerce, only banks that are efficient and effective can satisfy customer. This in scarce and abundant economics alike the problem is not production but marketing, if only we accept the truth that mass marketing is a pre-requisite for a successful mass production. Therefore, marketing consideration can only be the most critical factor in any business planning.


1.2 Statement of the Problems

In banking industries, the quality of services rendered by the banks have been attracting critisms from people in all works of life. The government functionaries, businessmen, the media and the general public are all very critical of banking services. The complaint ranges from those of efficiency, favouritism, long delays in casting cheques or making withdrawals, tardiness in granting loans or credits, unfriendly attitude of bank workers. Even the government that own a sizeable proportion of shares in most banks is known to constant aceusation of banks for not identifying enough with nation’s aspiration. That is the reason why one time the general staff had a cause to appeal to banks to leave arm chair banking and adopt the marketing concept in carrying out banking activities. Most banks do not put their customers in the prime place as there are supposed to be. There is now keen competition and accurate competition means applying the marketing concepts. Now, are these critisms about banks justified, or are they just a mere rundown of banking industry because they are making profit in an era of economic slump?


1.3 Objective of the Study

From all that have been written above, it is the aim of this study to take a segment of the banking industry and study the approach of the banks to their customer.

  1. To evaluate the application of the marketing concept by banks as a base for rendering services to their customers.
  2. To determine the various ways of marketing of banking services by the banks to their customers.
  3. To determine the effectiveness of marketing mix in the marketing of financial services.
  4. To identify the problems of marketing of banking services
  5. To proffer solutions to the problem of marketing of financial services.
  6. To appraise marketing strategies and make recommendations that would be more effective in the marketing services.

1.4 Research Hypothesis

The project is conducted with the aim of providing which to accept between null and alternative hypothesis, which is stated below.

  1. Ho: Application of marketing concepts is not the bases for rendering effective service to bank customers by banks.
    Hi: Application of marketing concept is the bases for rendering effective services to bank customers by banks.
  2. Ho: Time Consuming is not one of the problems in the banking services.
    Hi: Time consuming is one of the problems in the banking services

1.5 Significance of the Study

There have been so many criticisms about the banking industry in the way they render services to their customers. They do not see their customers as the king. The researcher wants to carry out a research an what banks do and find out if they adopt the marketing concept in the conditions of the services. The researcher also want to have an empirical base either to support all the sources about the poor impression people have on the banks and to advice the banks on how to improve on their services by adopting the marketing concept. The magic formular is adopting marketing as a way of life. A business must learn to think of itself not as producing goods services, but as buying customers and doing the things which will make people we to deal with it. Do banks really know their customers, and are they foucy or love? If my findings and not valid, I would say that there are no bases for the criticisms, but that they arise because the banks are doing well; if there services are actually poor, why should they make so much profit. Are they doing this at the detriment of their customers?


1.6 Scope and Limitations of Study

The scope of this study is very wide if it has to be carried out in all commercial banks in Nigeria. The study is limited, based on the fact that there is not enough time and resources to see to the whole nation. The study is limited to Enugu and the findings may not be valid for the whole banks in Nigeria, but by and large, what happens in Banks in Enugu can be said to apply to other banks. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.


1.7 Definition of Terms

Marketing:

Marketing is a process by which the customer and the customer’s wants are clearly identified and understood and then satisfied by the benefits of the goods or services supplied by the organizations. Chartered Institute of Marketing defined marketing as the management process responsible for identifying, anticipating and satisfying consumers requirements profitability.

Banking:

The banking act of 1979 and the bank other financial institutions act (BoFIA) 1991 SEC 25 defined banking as “The business of accepting deposit and collection of cheques and other instruments on behalf of customers, payment of cheques properly drawn by customers, providing finance to customers by way of overdrafts or loans, providing foreign exchange for individuals and corporate customers involved in manufacturing and providing expert financial advice to the customers generally” and other transactions as the commercial may, on the recommendation of the federal Gazette designate as banking business.

Marketing Concept:

The marketing concept is a management orientation which holds that the key task of the organization is to determine the needs and wants of target market and to adopt that the organization is delivering the desired satisfactions more effectively and efficiently in it’s competition.

Products:

A product is any thing that can be afforded to a market for attention, acquisition, use, or consumption.

Service:

These are separately Identifiable intangible activities which provide want satisfaction when marketed to customers and or industry, users and which are not another services.


1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain an appraisal of the impact of the liquidity problem on selected commercial banks in Nigeria

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of the liquidity problem on selected commercial banks in Nigeria


5.2 Summary

This study was on an appraisal of the impact of the liquidity problem on selected commercial banks in Nigeria. six objectives were raised which included: To evaluate the application of the marketing concept by banks as a base for rendering services to their customers, to determine the various ways of marketing of banking services by the banks to their customers, to determine the effectiveness of marketing mix in the marketing of financial services, to identify the problems of marketing of banking service, to proffer solutions to the problem of marketing of financial services, to appraise marketing strategies and make recommendations that would be more effective in the marketing services. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of first bank, Enugu state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up accountants, human resource managers, customer care officers and marketers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


5.3 Conclusion

This research study underpins or supports with evidence the fact that there exist a strong positive relationship between efficient liquidity management and banking performance in terms of Profitability and Return on Capital Employed (ROCE). Therefore the need for efficient liquidity management in the banking industry cannot be over emphasized particularly for reasons of maximizing profit levels and concurrently remaining liquid. For the banking industry in Nigeria, there is the need to emphasize ‘the need to remain liquid’. The study buttresses the fact that efficient liquidity management can significantly influence returns on capital employed by a bank and as well impact positively on the bank’s profitability and thus its stability. The high number of illiquid banks in the Nigerian banking industry as seen in recent times appears to attest to the fact that most bank management in Nigeria do not either place emphasis on strategic liquidity management or are deficient in it. Even though they may be efficient, most businesses in the Nigerian economy are transacted purely on cash basis such that managing liquidity effectively becomes cumbersome. Effective liquidity management creates good public confidence in the financial system of a country and good public confidence prevents a ‘run’ on the banking system and consequently on the liquidity state of banks. Since economic laws and variables from this study and other related researches have attested to the fact that there is correlation between efficient liquidity management and banking performance, the poor liquidity state of Nigerian banks could be hinged on management. Therefore, there is the need to formulate policies that will enhance effective liquidity management in the banking industry in Nigeria and the public usage of cash.


5.4 Recommendation

Below are the recommendations of the study:

  1. The need to replace being practiced in the advance economies of the world. Investing on human capital may be beyond just employees but also frequently creating an interactive forum where bank clients could be sensitize on a variety of activities they indulge in that are capable of hindering effective liquidity management.
  2. The need to invest on human capital by banks as it offers the highest returns in terms of increasing performance and it also enhances the level of competence of the employee.

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