THE SIGNIFICANCE OF CASH MANAGEMENT IN THE FINANCIAL SECTOR OF NIGERIAN ECONOMY

THE SIGNIFICANCE OF CASH MANAGEMENT IN THE FINANCIAL
SECTOR OF NIGERIAN ECONOMY
ABSTRACT
          This project is considered with the significance of
cash management in the financial sector.
          Cash management is important in the financial sector of any
economy.
          This research work looks into the effects of cash
management in the financial institution.
          In this research work, primary and secondary data were
utilized while chi – square was used to analysed the data collected.
          It was found out that management of banking operation have
not be able to formulate profit cash requirement.
          The conclusion is that financial institution in Nigeria
have liquidity and capitalization problems, the liquidity problems cover both
cash shortage and occasion surplus cash.
          It is my hope that this research will help the bank
financial institution on how to run effective and efficient cash management
system.
TABLE OF CONTENTS
Title                                                                                               Pages
Title                                                                                                    i
Certification                                                                                                 ii
Dedication                                                                                         iii
Acknowledgement                                                                                       iv
Abstract                                                                                            vi
Table
of Contents                                                                              vii
CHAPTER ONE:        
1.1     Background to the Study                                                                  1
1.2     State of the Problem                                                                4
1.3     Objectives of the Study                                                           5
1.4     Significance of the Study                                                                  6
1.5     Research Questions/ Hypotheses                                            7
1.5.1. Research Questions                                                                 7
1.5.2  Research Hypothesis                                                               7
1.6     Research Methodology                                                            8
1.7    Scope and
limitations of the study                                           9
1.8     Definition of Terms                                                                 10
1.9     Organization
of the Study                                                       13
CHAPTER TWO
2.0           
    Literature Review                                                                           14
2.1     Historical Background of Ecobank
International Plc              14
2.2     Conceptual Explanations                                                                  15
2.2.1  Cash Management                                                                   15
2.2.2   
Cash
Planning                                                                         16
2.2.3   
Managing the Cash
Flow                                                         17
2.2.4   
Optimum Cash
Balance                                                          17
2.2.5   
Investing idle
Cash                                                                  17
2.3     Demand for Money or Cash                                                    21
2.3.1  Factors that Affect the Demand for Money                                      22
2.3.2  Reason for Holding Cash                                                                  22
2.4     Cash Management Service Generally Offered                         23
2.4.1  Account Reconcilement Service                                               23
2.4.2  Advance Web Services                                                            24
2.4.3  Armored Car Services                                                             24
2.4.4  Automated Clearing House                                                     24
2.4.5  Balancing Reporting Service                                                   24
2.4.6  Lockbox Retail Services                                                          24
2.4.7  Lockbox – Positive Pay                                                                    25
2.4.8  Positive Pay                                                                                      25
2.4.9  Sweep Accounts                                                                      25
2.4.10         Wire Transfer                                                                          25
2.4.11         Controlled Disbursement                                                       26
2.5     Ecobank International Plc. Cash Management                        26
2.5.1  Account Management                                                             27
2.5.2  Payable Management                                                              27
2.5.3  Receivable Management                                                          28
2.5.4  Liquidity Management                                                            28
2.6     Problem of Cash Management                                                          29
2.6.1  Cash Flow Problem                                                                 29
2.6.2  Inflation                                                                                   29
2.6.3  Growth                                                                                    29
2.6.4  Change in Interest Rates                                                                   29
2.6.5  Level of Cash Reserves                                                           30
2.7     Method of Solving Cash Flow Problems                                 30
2.7.1. Cash Budgeting                                                                       30
2.7.2  Working Capital the Control of Cash                                               30
2.8.    Source of Finance                                                                             31
2.9     Over Capitalization                                                                 32
CHAPTER THREE
3.0     Research Methodology                                                            33
3.1     Research Focus                                                                       33
3.2     Research Instrument                                                                34
3.3     Restatement of Research Question/Hypothesis
                      34
3.4     Population and Sampling of the Study                                   36
3.5     Sources of Data Collection                                                      36
3.5.1  Primary Data                                                                           36
3.5.2  Secondary Data                                                                       36
3..6    Description of Questionnaire                                                  37
3.7     Method of Data Analysis and Description of
Tools of Analysis. 37
CHAPTER FOUR
4.0     Data Analysis, Interpretation and
Discussion of Findings                38
4.1     Interpretation of Items                                                            38
4.2     Analysis of Data                                                                     38
4.3     Analysis of Table                                                                              39
4.3.1  Table 1: Department of the Staff                                             39
4.3.2  Table 2: Working Experience of the Respondents                            40
4.3.3  Table 3: Academic Qualification                                            40
4.4     Test of Hypothesis                                                                            45
CHAPTER FIVE
5.0           
Summary,
Conclusion, Recommendation and Suggestion for         
          Further Studies                                                                        51
5.1           
Summary                                                                                 51
5.2           
Conclusion                                                                              51
5.3           
Recommendations                                                                   52
5.4           
Suggestion for
Further Studies                                                         53
Bibliography                                                                           54
          Appendix A:                                                                           56
          Questionnaire                                                                          57
CHAPTER ONE
1.1           
BACKGROUND OF THE STUDY
Cash
is essential and very important for the operation of any business. It is needed
to carry out normal day to day activities of a business. It also the ultimate
output expected to be realized in exchange for services rendered to customers.
Cash
is the money which a firm can disburse immensely without any restriction. Doing
business takes cash and profitability produces cash. As business grows much
cash is required to keep the business on a going concern. Money is required at
the right time and in right amount.
This
forms the basis part of cash management system that will be discussed in this
project.
Cash
management is significant in financial sector of Nigeria Economy because cash
constitute the smallest portion of the total current asset yet managements
considerable time is devoted in managing it.
Cash
management is concerned with managing of:
i.        Cash flows in and out of the financial institutions.
ii.       Cash
balanced held by an organization at a point in time by financial deficit or
investing surplus cash.
Cash management is
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