Research Key

EFFECTS OF FUND MANAGEMENT ON CAPITAL SURVIVAL IN COMMERCIAL BANKS: CASE STUDY OF UNITED BANK FOR AFRICA (UBA) YAOUNDE

Project Details

Department
INTERNATIONAL RELATION
Project ID
IR046
Price
5000XAF
International: $20
No of pages
42
Instruments/method
QUANTITATIVE
Reference
YES
Analytical tool
DESCRIPTIVE
Format
 MS Word & PDF
Chapters
1-5

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ABSTRACT

The study aimed at assessing the effects of fund management on capital survival in commercial banks – a case of UBA bank Yaounde. The study adopted a descriptive research design. Data used was obtained through questionnaires. The determinants retained where cash management, payables management and receivables management. Descriptive statistics and the logit regression analysis method were used to estimate the parameters.

The results obtained revealed that, cash management, payables management and receivables management exert a positive and significant effect on capital survival of UBA banks. This implied that cash management, receivables management and payables management can be relied on as the main determinants of capital survival in UBA bank Yaounde.

Keywords: Fund management, capital survival, commercial bank.

CHAPTER ONE
GENERAL INTRODUCTION
INTRODUCTION

This study is divided into five (5) interrelated chapters. Chapter one introduces by providing a background of the study, statement of the problem, objective of the study (general and specific), research hypothesis, significance of the study, organization of the study. Chapter two dwells on literature review specifically conceptual review, theoretical review, empirical review and the knowledge gap and contribution.

The third chapter is the methodology of the study which consist of the scope of the study, research design, sources and method of data, model specification, model estimation, variables and operationalisation, pre-estimated tests, validity and reliability. Chapter four has to do with the presentation of the results obtained and finally, chapter five discusses findings, draws a conclusion makes recommendations, and brings out the limitations of the study and suggestions for further studies.

1.1 Background of the study
Financial institutions in the Cameroon context includes banks, leasing companies, insurance companies, pension funds and provident institutions which play an important role in the economic life of a country. To understand the concept of banking, we must understand the meaning of banking or banker, because banking is the set of activities which a bank or banker performs. Banking according to Alabi, is the business of providing services to customers and businesses.

The bank provides a large range of services to both its customers and the economy. These services are cheque accounts, which can be used like money to make payments and purchase goods and services; savings accounts and time deposits that can be used to save money for future use, loans that customers and businesses can use to purchase goods and services; and basic cash management services such as check cashing and foreign currency exchange (Marcus Garvey Orji et al, 2016).
According to Ofuani, commercial banks mobilize deposits and the extension of credits.

They act as financial intermediaries, collecting money on deposit from one group and lending it out to another group. In order to maximize their earnings, every bank attempts to structure their assets and liabilities in such a way as to yield the highest return. It is clearly evident that a large chunk of the bank’s balance sheet is under the control of a treasury and cash management skill which is required for effective control of the items in order to meet their operational targets, such as the case of liquidity, capital survival and profitability.

Therefore, the need for effective fund management cannot be over emphasized in the successful operation of a bank. The justification for effective cash operations is that more money will be earned (Marcus Garvey Orji et al, 2016). Fund management involves managing money at a maximum cash availability and maximum interest income on idle funds.
The banking institution had contributed significantly to the effectiveness of the entire financial system as they offer an efficient institutional mechanism through which resources can be mobilized (Wilner, 2000). Banking system as a whole plays an important role in the economy of a country irrespective of its level of development (ASA university review, 1 january-june 2012).

Commercial banks have overtime become very important institutions in the financial system as they function as retail banking units facilitating the transfer of financial assets that are well desired from some part of the public (fund lenders) into other financial assets which are more widely preferred by greater part of the public (fund seekers) (Research journal of finance and accounting).

Bank fund management is the administration of funds flowing into and out of a bank in a way that maintain capital, liquidity, profitability and solvency. Fund management is the key to short – intermediate term decision making in the banking environment. It includes all policies and approaches designed to obtain funds from deposits and borrowings and to allocate them to loans and advances and investments (Hoque, 1989).
In an economic sense, bank capital is the value of equity owned by shareholders. Bank economic capital can be defined as the value of the equity of a bank that can withstand losses (Global finance development report 2019/2020).
1.2 Statement of the problem
Through a financial inter-mediation role, commercial banks reactivate the idle funds borrowed from the lenders by investing such funds in different classes of portfolio. Considering the public loss of confidence as a result of bank distress which has bedevilled the financial sector in the last decades; and the incentive of competition in the banking sector due to the emergence of large number of new banks, every commercial bank should ensure that it operates in profit and at the same time meets the financial demand of its depositors by maintaining adequate liquidity.

The problem then becomes how to select or identify the optimum point or the level at which a commercial bank can maintain its assets in order to optimize these three objectives since each of the liquidity has a different effect on the level of profitability (Research journal of finance and accounting, 2011).

Previous studies analyzed the internal and external determinants of a bank’s profitability. In this light, many researchers have focused on the main risks that might affect the bank’s capital. However, limited researches have been undertaken to analyze if fund management affects significantly capital survival of a bank. There is no doubt that an effective fund management in place to evaluate capital survival to their maximum has some problems facing that evaluation.

Some of the problems encountered include; risk default, weak management system, conflicting capital requirements, inefficiency in the internal control system. The aim of this study is to investigate why banks face capital survival problems and liquidity problems in spite of their supposing good fund management system.

1.3 Objective of the study

 

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