TABLE OF CONTENTS
Title page i
Table of contents v
1.0 Introduction 1
1.1 Statement of Problem 4
1.2 Research Questions 5
1.3 Objectives of the Study 6
1.4 Research Hypothesis Problems and Prospects of Cash Management in Commercial Banks 6
1.6 Significance of the Study 7
1.7 Scope and Limitation of the Study 8
1.8 Definition for Key Terms 9
1.9 Organizing/Plan of the Study 11
Literature Review 13
Background of Union Bank of Nig Plc 15
Appraisal of Cash Management Application 16
Definition of Cash Management and Motive
of Holding Cash 18
Principle of Cash Management 20
Instrument of Cash Management 22
Monetary Policy 22
Instruments of Monetary Policy 24
Factors of Cash Management 24
3.0 Research Methodology 26
3.1. Source of Data Collection 27
3.2 Sample Size 29
3.3 Restatement of Research Problem 29
3.4 Data Analysis and Techniques 31
3.5 The Design of the Study 32
3.6 The Population of the Study 32
Data Presentation and Analysis Data Presentation 33
Analysis of Results 35
Discussion of Result 43
Result Relating to Hypothesis Testing 43
Policy Statement 47
5.0 Findings 48
5.1 Summary 49
5.2 Conclusion 51
5.3 Recommendations 53
The concept of management was evolved as a result of
existence of man. Hence, it could be traced back to the evolution of money. In
this case, the origin of money which brings about cash management in our
contemporary commercial backs really comes as the aftermaths of the
difficulties of trade by barter. Trade by barter is a system and practice where
goods are exchanged for goods and services. Barter system has many defects and
drawbacks. These include the difficulty of double coincidence of wants, time
and energy wastage, difficulty in ascertaining the value of commodities, discouragement
of large quantities and variety of purchases, deferred payment, installment
payment and borrowing large scale production and such like.
Having identified the defects inevitable by barter
system, people were false to fashion out a generally acceptable means of
exchange i.e. money. It worthy to note that the paper money presently in use
was originated from the receipt the goldsmith issued to people who kept gold
and other valuables with them. As goldsmiths were taught to be honest, merchant
people started keeping their gold with them for safe custody. In retain the
goldsmith gave the depositors receipts promising to return the gold on demand.
These receipt of the goldsmith were substitutes for money, such paper was back
by gold and was convertible on demand into gold. This ultimately led to the
development of bank note and today, money has another form other than paper
Thus, money is any thing that is generally acceptable
as medium of exchange for making payment, settlement of debt or other business
obligations. The qualities of money such as generally acceptability,
portability, durability homogeneity, divisibility, recognizatbility and
scarcity make money and prudent management. Paper money and coins are
collectively called cash. Today, customer deposit money with banks and banks
give a promise to pay on demand the amount deposited by the customer. The
customer can withdraw all his or her money in cash for the purpose of settling
his or her debts or he or she can issued cheque by asking the bank to transfer
the stated sum form his deposit to beneficiary.
So, the continued patronage of a bank by a customer
depends on some important factor among which are the following:
cash to meet the immediate and urgent needs of customers.
The qualities of
The proximity of
the back to the customer’s business premises.
The approach ability and business acquisitive of its
Of all the reasons listed above, there is one which
ranks supreme to all other reasons and that is the ability to strike balance
between the shareholder and customer i.e. problem of profitability and
liquidity are equally the utmost. The bankers has to keep enough cash in order
to meet customers demand at the time will serve the interest of the shareholder
who are expecting returns over the investment.
1.1 STATEMENT OF PROBLEM
In course of the study, the research is centered on
ineffective cash management in our country’s commercial banks with particular
attention to Union Bank that which deprives our country’s banking industry of
competing with banks of developed countries of the world.
The following recommendations are suitable for the
solution to the problems of cash management.
i. There should be experienced and honest
personnel employed into the bank for effective and efficient management of
ii. The idle balance should be properly
invested in economy income.
iii. There should also be supervisor and
implementation of loans by banks so as to ensure that the loan is well utilized
for the intended purpose.
iv. Cash inflow and outflow overtime period
should be adequately prepared and adhered to.
v. Adequate supervision to branches without
notice should be undertaken to ascertain that they operate in efficient way to
improve cash management.
1.2 RESEARCH QUESTIONS
This paper intends to find answer to these questions
so as to achieve it objective and for the purpose of this research work.
i. What are the saving services of the banks
and their operation?
ii. What are the native of operation of the
iii. What are the conditions to grant loan and
on what type of collateral do you grant loan?
iv. How does cash manager meet the demand of
the deposit and the shareholder?
v. What is the policy of bank on the shortage
or surplus declared by the central banks?
vi. Does your bank has any has investment in
other bank or industry?
1.3 OBJECTIVES OF THE STUDY
The main objective and aim is to examine the problems
and the suggested prospects of cash management in commercial banks. It also
aims the following objectives.
- To meet
minimize the finds committed to cash balance.
- To proffer strategies techniques to
ensure efficient cash management as this could by the commercial banks as modem
determine the appropriate target cash balance.
- To determine how cash can be manager
efficiently and effectively.
1.4 RESEARCH HYPOTHESIS PROBLEMS AND PROSPECTS OF
CASH MANAGEMENT IN COMMERCIAL BANKS
management does not have positive effect on the
profitability of commercial banks.
Hi: Cash management has positive effect on the
profitability of commercial banks.
1.5 SIGNIFICANCE OF THE STUDY
The study of this research work is particularly of
great importance to the bank, government, researcher and to the public.
TO THE BANK:
The study of this research work allows the bank to
develop strong internal control of cash receipts and disbursement so as to
manager the inflow and outflow of cash in order not be face liquidity crunch i.e.
borrowing at disadvantage.
TO THE GOVERNMENT:
The study of this work gives a means of eradication of
the difficulties in the implementation of monetary policy by the central bank
also recommend a capacity building framework for developing countries and to
find loans to some government parastatals e.g. farmers.
TO OTHER RESEARCHERS:
It gives the advantage to a researcher to look at the
float management for techniques, disbursement control and investment of idle
cash, specifically relevant data from Union Bank of Nigeria Plc
TO THE PUBLIC:
To maintain adequate level of cash to meet operational
and capital requirements and to obtain the maximum yield on short term investments
of pooled, idle cash and to maintain adequate monies at hand to meet daily cash
requirement of the municipality while maximizing the amount available for
investment and to obtain maximum earning in invested finds while ensuring their
AND LIMITATION OF THE STUDY
The scope of this study focus attention on cash
management in commercial banks problems and prospects with a case study of
Union Bank of Nigeria Plc.
The researcher faced so many limitations while
conducting the research which includes insufficiency of data as some officials
could not respond to the questionnaire as they have to attend to their primary
Insufficiency of data is also part of the limitation
faced in the course of this research work as the bank officials being unable to
disclose some information.
Another problem or limitation in the course of this research
work is inadequacy of fund because the researcher needs some amount of cash to
do one or two thing (i.e. Transportation) in the process of the researcher
work. Uncooperative attitude of respondents is another limitation the
researcher faced while conducting the research work.
1.7 DEFINITION FOR KEY TERMS
- A coin is a metal money with definite amount and weight issued and stamped by
the central authority responsible for the issuing of money in a country.
PAPER MONEY: As the name implies, it is a form of paper money which was originated
from the receipt of the goldsmith issued to people who kept gold and other
valuables with them.
MONEY: - This is the money one keeps in his or her bank
account for safe keeping also called deposit which can be given back to the
owner or demand.
CUSTOMER: - This is refers to as an individual, organization or club who keeps
money and other valuables with the bank for safe keeping and for future
This is an institution set up purposely for safe keeping of money, valuable
goods and essential documents.
This refers to coin and paper form of money people and organization keeps in
the bank for safe keeping.
This is an institution or a bill of exchange made upon a bank to pay a given
sum of money to a named person or bearer at a specific date.
This entails the amount of money i.e. cash every individual or organization
keeps in the bank over a period of time.
TRANSACTIONARY MOTIVE: It is the desire of holding money in order to meet
day to day needs of individual or organization.
PRECAUTIONARY MOTIVE: This is the desire for holding money in order to
meet up with unforeseen development or contingencies or unexpected expenditure.
SPECULATIVE MOTIVE: This is a desire for holding money with the hope of
using such money kept in making quick money.
1.8 ORGANIZING/PLAN OF THE STUDY
The organization or plan of the study contain what
each chapter is all about.
Chapter one contain the introduction of the study,
statement of problems, the research questions, objectives of the study,
research hypothesis, significance of the study, scope and limitation of the
study, definition of terms and the organization of the study.
Chapter two contains the literature review, historical
background of the case study (Union Bank of Nigeria Plc.) corporate objectives
of Union Bank of Nig, Plc, appraisal of cash management application, control of
loan and advances in Union Bank, definition of cash management and motive of holding
cash, principle of cash management, instrument of cash management, procedure in
management of cash, monetary policy, instruments of monetary policy and readiness
to hold additional deposit.
Chapter three reveal the research methodology, the
sources of data collected sample and sampling, the restatement of research
problem, data analysis and techniques, the design of the study and the
population of the study.
Chapter four reveal the data presentation and
analysis, analysis of results, discussion or result and the result relating to
the hypothesis and the policy statement.
Chapter five which is the last chapter consists of the
findings, conclusion, summary, recommendation and references.