The Impact Of Fund Management And Corporate Survival In Developing Nigerian Banking Institution (A Case Study Of Central Bank Nigeria, Ilorin)
The Impact Of Fund Management And Corporate Survival In Developing Nigerian Banking Institution (A Case Study Of Central Bank Nigeria, Ilorin)
Proposal
Introduction
A fund is available or ready money with which an asset can be converted to cash in order to meet the withdrawal needs of the depositors on demand. There are need for planning and controlling the fund (money) of an organization for the purpose of achieving the financial objective of the organization.
Statement of the Problem
The decision to be undertaken on impact of fund management on corporate survival in Banking institution as problem of study could be made under the imperfect knowledge of the following factors like bad loan and advances to customers, fraudulent practices of management under capitalization, bad management, lack of proper supervisor, granting of unsecured credit facilities to owners, director and related companies etc. and if the perfect knowledge existed, these problem would disappear and these would be perfect fund management which would lead to perfect corporate survival of every banking institution.
Research Question
These are logicality derived from the problem statement and the objectives and more for instance, using for privatilization example, research question can be generated from a much more refined topic such, pre and post privatilization in Nigeria. The effect on the citizens’ standard of living and the economy as a whole. Research question such as the following can be generation for the study.
- What is the difference in the level of standard of living of the citizen before and after privatilization.
- What is the difference in the supply or distribution of the relevant goods or services before and after privatalization.
Objectives of the Study
The aim of the study is to find out the impact of fund management on corporate survival in banking institution (A case study of CBN)
The objective of fund management can be categorized into the following aspect.
- To maximize profit (i.e. profitability) which means expanding revenue and keeping down cost which make profit to be maximized for the benefit of equity holder
- Suitability in term of adequate financing of the project for which the fund is undertaking
- The safety of the fund given out by bank to their customers.
Significance of the Study
The significance of this study is to critically examine the importance of fund management in the corporate survival in the banking institution. The study is performed from the banking supervision annual report of year 2010 produced by CBN.
However, it is not possible for me to go to all institution as a result of various constraints and limitations which are as follows
- Time available for the research work
- Finance to carry out the research work
Research Hypotheses
In order to achieve the objective stated, the research tested the following hypotheses is represented by Ho.
This type of hypotheses is a testable state which asserts that the observed result is completely due to chances. It is always stated in positive form and subjected to statistical testing.
Research Methodology
The research methodology and design in the study were descriptive and hypotheses. The research design were chosen because it does not limit the purpose of data collected to a single method and also it ensure that the procedure to be adopted is carefully planned so as to obtain accuracy and completeness information about research question.
Definition of Terms
Central Bank of Nigeria:
Is the bank that controls all other banks within a particular country or a national bank that operates to establish monetary and fiscal policy and to control the money supply and interest rate.
Money Market:
it is a financial market for short term fund i.e. fund that has less than 1 year duration.
Certificate of Deposit:
it is an inter bank obligation used to acknowledge any fund surplus deposit among them.
Eligible Stock:
is a federal government of Nigeria or state government of Nigeria development stock or bonds.
Scope of the Study
This project will centre on the impact of fund management and corporate survival in developing Nigerian Banking Institution (A case study of Central Bank of Nigeria, Ilorin)
Plan of the Study
- The first chapter deals with background of the study, statement of the problem, objectives of the study, significance of the study, research hypotheses, research questions, definition of terms and organization of the study.
- Chapter two will focus on the literature review
- Chapter three will deal with the Research methodology, data collection procedure, sources of data collection, questionnaire design and administration, method of data analysis, analysis of data details of respondent from the questionnaires, findings to research question and limitations of research method.
- Chapter four will base on the data presentation, data analysis and findings.
- Chapter five which is the last chapter will focus on the summary of findings, conclusion and recommendations.
Table of Contents
- Title Page
- Certification
- Dedication
- Acknowledgement
- Proposal
- Table of Contents
Chapter One
1.0 Introduction
- 1.1 Introduction
- 1.2 Background of the Study
- 1.3 Statement of the Problem
- 1.4 Objectives of the Study
- 1.5 Significance of the Study
- 1.6 Research Hypotheses
- 1.7 Research Questions
- 1.8 Definition of Terms
- 1.9 Organization of the Study
Chapter Two
2.0 Literature Review
Chapter Three
3.0 Research Methodology
- 3.1 Research Methodology
- 3.2 Data Collection Procedure
- 3.3 Primary and Secondary Sources
- 3.4 Questionnaire Design and Administration
- 3.5 Method of data Analysis
- 3.6 Analysis of Data details of Respondents from the Questionnaires.
- 3.7 Findings to Research Question
- 3.8 Limitation of Research Method
Chapter Four
4.0 Data Presentation, Analysis and Findings
- 4.1 Data Presentation
- 4.2 Findings
Chapter Five
5.0 Summary Conclusion and Recommendations
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendations
- References
Chapter One
Introduction
1.1 Introduction
It is necessary to firstly talk about the definition of fund, function and aspect of fund management in manageable decision.
Also to mention sources of fund in banking institution is all about.
A fund is available or ready money with which an asset can be converted to cash in order to meet the withdrawal needs of depositors on demand.
There are needs for planning and controlling the fund (money) of an organization for the purpose of achieving the financial objective of the organization.
Fund management is a managerial decision: these could be categorized into three aspects.
Firstly, investment decision which is how funds are thus allocated and committed of the banking institution capital fund into project that will yield future benefits in life with the expectation of the owner, it is significant because of the future cannot be predicted with the reasonable certainty, then there will be element of risk. Apart from identifying an investment for new project, the financial management considers with the maintenance of existing asset to enable them continue to generate return. This means that investment as well as short term investment (Working Capital).
Secondly, financial decision: this is a process of selecting suitable fund to finance long-term asset and short term assets.
Having decided on what project and how much is needed in term of money (fund) then the problem is how to raise the fund to meet the investment, therefore, the source of fund raising could be internally generated fund, (retain earning) or externally generated fund, in form of equity share (ordinary share holding capital).
Thirdly, dividend decision, this has to do with what proportion of company’s profit is paid out as dividend return to the capital provider of economy fund, therefore, care has to be taken in considering optimum decision. Whatever is paid out as dividend will not long be retained in the business for further growth funding.
Sources of Fund Available to the Banking Sector
The sources of bank funds are as follows:
1. Primary Sources
This is the talking about short term asset and other liquidity instrument such as treasury bills, commercial paper, certificate of deposit, bank deposit, treasure certificate and eligible stock.
2. Secondary Sources
This is talking about short term loan advances, however, a bank will have its liquidity more replenishment and the more the replenishment of its loan and advance are made.
3. The Apex Bank
The apex bank (i.e. CBN) serves as a source of fund to the banking sector as its last resort. The banks always approach CBN for short term fund whenever they are short of funds. The CBN also facilitate the financial instrument. However, fund management in banking sector could be necessary in order to meet customer withdrawal, to satisfy the monetary authority policy necessary. Therefore, it could be said that the bank is having fund when it could meet the above requirement.
Central Bank of Nigeria specifies in monetary policy from time to time what the liquidity ratio should be and the asset that has to be considered liquid. The liquidity assessments enable us to determine the effectiveness and efficiency of fund management of the bank where the bank is rich a verse or badly managed.
1.2 Background of the Study
The case study is on Central Bank of Nigeria; Central Bank of Nigeria was established as a result of WACB in 1992 which was automatically linked the British system which make investment policy rather conservation in the sense that sterling reserve were invested only in British and WACB could no longer engage in monetary management and in order to eliminate the efficiency and to promote the growth of domestic money and capital market, the need for establishment of CBN data book to 1981 when three study as conducted in every degree and incentives and the study were:
- The Dr. Mors unpolished study on the need for the establishment of a CBN. The study was on the Dr. Denis only made a passing mention of the desirability of CBN;
- The Trevor report was the second study. Trevor however focused his effort on attention on the gold cost and the he recommended against the establishment of CBN in Nigeria;
- David Rovan conducted the third study suggested in his conclusion that the need for CBN was not an urgent one.
In March 1982, Dr. K.O. Mbadikwe move a motion during the first session of the new constituted house of representative that has a practical means of consolidating the financial resources (including regulation of good and current) of this country, for the purpose of rapid economy growth ad as strengthening the existing African Bank that the government should initiate organize, established CBN with two years from the passage of this motion. On April, 19th 1952, the Bill was revisited and discussed with financial secretary the Hon. E. Hunsworth who objected the establishment with the following reasons:
- A constituted of a WACB Africa;
- Establishment of a Nigeria bank for issue;
- A gradual transmission of Central Bank establishment in 1953, a group of officials of the IBRD visited Nigeria and reviewed Fisher’s report and disagreed with some of his proposal as it is too traditional. In 1956, Mr. J.B. Loynes concluded in his report that Central Bank should be established in Nigeria.
The recommendation lead to the passage of CBN ordinance in 1958 with a board of directors appointed. The board was made up of governor and deputy governor both appointed by governor general and prime minister of the federation. For other members of the board, Mr. R.P. Fenton was the first governor and official of the Bank of England. The responsibility to issuing currency and managing the country’s debt. The secretary department who was responsible for administration, research and statistics.
1.3 Statement of the Problem
The decision to be undertaken on impact of fund management on corporation survival in banking institution as problem to study could be made under the imperfect knowledge of thus following factors like, bad loans and advances to customers, fraudulent practices of management under capitalization, bad management, lack of proper supervision, granting of unsecured credit facilities to owners, director and related companies, etc. and if the perfect knowledge existed, these problems would disappear and there would be perfect fund management which would lead to perfect corporate survival of every banking institution.
1.4 Objectives of the Study
The aims of study is to find out the impact of fund management on corporate survival in banking institution (A case study of CBN)
The objective of fund management can be categorized into the following aspect:
- To maximize profit (i.e. profitability) which means expanding revenue and keeping down cost which make profit to be maximized for the benefit of equity holder.
- Satisfying of shareholder, loan to creditors, supplier of labour supplier of management of skill and customer no one should be seen having preeminent of each other.
- Suitability in term of adequate financing of the project for which the fund is undertaken
- The physical and mental growth of the banking institution.
- Maximization of shareholder wealth who are the legal owner of sector. Therefore, increase in value of ownership of wealth will manifest if the market price of the sector share increase.
- The safety of the fund given out by bank to their customers.
1.5 Significance of the Study
The significance of this study is to critically examine the important or fund management in the corporate survival in the banking instruction. The study is performed from the banking supervision annual report of year 2008 produced by C.B.N. however, it is not possible for me to go to all institution as a result of various constraints and limitations which are as follows.
- Time available for the research work
- Finance to carry out the research work
- Inconvenient encountered during the research
1.6 Research Hypotheses
In order to achieve the objective stated, the research tested the following hypotheses is represented by the Ho. These types of hypotheses are a testable state which asserts that the observed result is completely due to chances. It is always stated in positive from and subjected to statistical testing.
Alternative hypothesis prevented by Hi the types of hypothesis clearing that population parameter value are different from hypothesized. If is always stated in positive from and not subjected to statistical testing of any form.
Hypothesis
Ho: find management has to impact on certificate survival in the Nigeria banking institution. The study is written to mention generally the impact of fund management on the profitability position. Liquidity position credit facility and balance sheet and growth rate of banking sectors as well as to show effect of corporate survival to the banking sector.
This study will also be of an assumed of their fund invested or deposited with bank on how the fund is been utilized and safety at the investment in the bank to know the question of their benefit as a return of their interest in the bank. It also assists the banking sector to know how to utilize the credit fund of the deposit or in terms of lending to the borrowers in order to meet urgent demand of the depositors. To the economy at large, the research work will be of good interest to the national economic problem that urgent attention on the banking sector through formulation of various laws and policies that will strengthen the banking sectors by the government and apex bank (C.B.N).
1.7 Research Question
These are logically derived from the problem statement and the objective and more for instance, using privatization example, research question can be generated from a much more refined topic such, pre and post privatization in Nigeria. The effect on the citizens’ standard of living and the economy as a whole. Research question such as the following can be generation for the study.
- What is the difference in the level of standard of living of the citizen before and after privatization?
- What is the difference in the supply or distribution of the relevant good or service before and after privatization?
1.8 Definition of Terms
C.B.N
Central bank of Nigeria:- is a national bank that operates to establish monetary and finical policy and to control the money supply and interest rate. In 1948 an inquire under the leadership of G.D paten was established by the colonial administration to investigate banking practices in Nigeria. Prior to the inquiry, the banking industry was largely uncontrolled. The |G.D paten report, an offshoot of the inquiry became the cornerstone of the first banking legislation in the country, the banking ordinance of 1952. The ordinance was designed to prevent non viable bank from mushrooming and to ensure orderly commercial banking. The banking ordinance triggered a rapid growth in the industry, with growth also came disappointment. By 1958 a few number of bank had failed. To curtail further failures and to prepare for indigenous control, in 1958, a bill for the establishment of central bank of Nigeria was presented to the house of representatives of Nigeria. The act was fully implemented on July 1, 1958, when the central bank of Nigeria came in to full operation. In April n1960, the bank issued its first treasury bills. In may 1961.
The bank launched the Lagos bankers clearing house, which provided licensed bank a frame work in which to exchange and clear checks rapidly. By July 1, 1961 the bank had completed issuing all denominations of new Nigerian notes and coins and redeemed all of the West African currency board’s previous money.
WACB
West African currency board:- they explore copper money objects at the time of the Sehelian empires of ancient Ghana and Mali, glass beads as money in 19th century east Africa’s central caravan road, gin currency in colonial southern Nigeria, bank and east African currency board established in 1912 and 1919 respectively.
IBRD
International bank for reconstruction and development:- is an international financial institution which offers loans to middle income developing countries. The “IBRD” is the first of five member institutions which compose the world bank group and is headquartered in Washington, D.G united states. It was established in 1944 with the mission of financing the reconstruction of European nations devastated.
Money Market:
It is a financial market per short term fund i.e. fund that has less than 1 year duration.
Capital Market:
This is a financial market per long term fund i.e. fund that has more than 1 year duration.
Treasury Certificate
It is a money instrument used for federal government of Nigeria debt obligation between 3 and 12 months durations.
Certificate of Deposit
It is an inter bank obligation used to acknowledge any fund surplus deposits among them.
Eligible Stock
It is a federal government of Nigeria or state government development stock or bonds.
Deposit
It is fund deposited with a bank by its customers for investment purpose
Commercial Paper
This is a promissory note issued by company that has shortage of fund to funds to borrow. The maturity is between 2 and 6 months and it can be presented to bank for discounting.
CAMA
Company and Allied Matter Act
SBN
State Bank of Nigeria
BOFID
Bank and Other Financial Institution Decree
Monetary Policy
Means all measure put in place by the government in order to regulate the value, surplus and cost of money in an economy in agreement with the level of development of the financial market of the country.
1.9 Organization of the Study
For the effectiveness of the works, this study will be divided into five chapter of topic. The impact of fund management on corporate survival in the Nigeria banking institution.
Chapter two is on literature review which deals with the review of relevant and related literature works of several scholars relating to the study.
Chapter three is research methodology which is based on analysis and sources of data.
Chapter four contains historical background of case study. The impact of fund management on corporate survival in the Nigeria banking institution, optimum fund management and nature of fun motive for holding ash
Chapter five contains summary of findings, conclusion and recommendations.
Chapter Five
5.0 Summary, Conclusion and Recommendation
5.1 Summary
The procedure adopted for the extraction of findings for this project has been simply analytical. This view expressed by respondents in the returned questionnaires are analyzed and reported with simply additional information provided on known problems areas.
This project adopted through but systematic procedures. Chapter one of the project traced the historical development of the banking sector used as case study.
In chapter two reviews was made of literature relevant to the project particularly the topic. The impact of fund management on corporate survival in Nigeria banking institutions.
In chapter three, the research methodology and design was done on the introduction chapter on what the reader would expect to find in the chapter. The questionnaire design and administration done, data collection and measurement instrument were further described. Likewise, the procedure of data processing and analysis, statistical test and the level of significance were defined. Test as such measurement of chi-square factor analysis test bar-chart are used. Also chapter four was made of historical background of central banking profitability position, liquidity position and the causes of bank failure and persistent distress in the banking industry.
5.2 Conclusion
After the careful analysis of the data obtained in chapter three, the following deductions were made.
- That there is no proper maintenance of depositors which leads to low deposit of fund in the bank.
- Lack of proper management of banks staff to carry out the effective work of the banks in terms of their ultimately inclusion of increment and additional benefit.
- Lack of an effective internal control system to check t he work of the senior staff of the bank in terms of easy access of fund and other in regulation.
- That the inadequacy or lack of able qualified man power results in uncontrolled administration of bank system.
Fund management on corporate survival in banking institution if properly administered can be effective tool to improvement of performance of any banks, motivation of workers and satisfying of investors.
Mis management of funds may lead to high turnover labour, high absenteeism low salaries payment, more grievance, poor facilities, loss of profit, lack liquidity and job dissatisfaction for fund management to be appreciated it must be internally and externally equitable. Through job evaluation, the relative effective work force and proper maintenance of depositors which make the worth of job determined. This ensure internal equity, while the salary survey paid to staff are used to determine equity. The process of fund management corporate survival in banking institution is influence by several challenge include union power, the productivity of staff, senior staff or top level management influence in the company funds this banks policies of and government constraints or guidelines on banks fund.
Financial report is another dimension of showing the fund management of bank which are periodically reported to the public, investors, union, workers government, shareholders and management of the sector to highlight the financial position or performance on fund management of the bank base on their profit ability position liquidity position, capital adequacy asset quality and credit facility.
5.3 Recommendation
Having noted the start coming the following are the recommendations and suggestions which the researcher feels will improve the overall purpose of banking fund management.
- The provision of rules regulations acts or decrees or standard e.g. CAMA 90 formulation, promulgated of advance by government should be implemented fairly and fearlessly.
- There must be immediate need for proper computerization of all activities in finance at the banking institution also computerization should be done with on the job training of the personal in each section in the banking sector to ensure proper save funds and effective security should be made in order to disallow easy access of unauthorized person from the use of computer system, enough materials to assist in direction of errors.
- Where there is improper system of internal control capable of checking the contribution of mal-administration officers should be regulatory reviewed to check their effective functioning also immediately employment of experienced and competent personnel to hold key position in the banking sector as a result of repaid changes in economic condition and regulatory frame work.
- Moderation is also needed on the operation bill in order to improve capacity of the bank to turn income to profit and the attendant return on the assets shareholder, equity.
- The establishment of a very strong supervisory frame work this will enhance supervisory capacity and strict enforcement of law and regulation.
- Finally, credit policies and re-examination of the credit policies must be taken in place by the bank in order to improve the performance of risk asset by granting the loan with a clue agreed to ability to borrow to repay and collateral security
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