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.
i.
What is the difference in the level of
standard of living of the citizen before and after privatilization.
ii.
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.
i.
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
ii.
Suitability in term of adequate financing
of the project for which the fund is undertaking
iii.
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
1. Time
available for the research work
2. 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
1.1 Introduction 1
1.2 Background of the Study 4
1.3 Statement of the Problem 7
1.4 Objectives of the Study 7
1.5 Significance of the Study 8
1.6 Research Hypotheses 9
1.7 Research Questions 11
1.8 Definition of Terms 11
1.9 Organization of the Study 15
CHAPTER TWO
2.1 Literature Review 17
CHAPTER
THREE
3.1 Research
Methodology 22
3.2 Data
Collection Procedure 22
3.3 Primary
and Secondary Sources 22
3.4 Questionnaire
Design and Administration 23
3.5 Method
of data Analysis 24
3.6 Analysis
of Data details of Respondents from the Questionnaires. 24
3.7 Findings
to Research Question 40
3.8 Limitation
of Research Method 41
CHAPTER
FOUR
4.0 Data
Presentation, Analysis and Findings 42
4.1 Data
Presentation 42
4.2 Findings 42
CHAPTER
FIVE
5.0 Summary
Conclusion and Recommendations 48
5.1 Summary 48
5.2 Conclusion 49
5.3 Recommendations
References
CHAPTER
ONE
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:
i.
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;
ii.
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;
iii.
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:
i.
A constituted of a WACB Africa;
ii.
Establishment of a Nigeria bank for issue;
iii.
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:
i.
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.
ii.
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.
iii.
Suitability in term of adequate financing
of the project for which the fund is undertaken
iv.
The physical and mental growth of the
banking institution.
v.
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.
vi.
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.
i.
Time available for the research work
ii.
Finance to carry out the research work
iii.
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.
i.
What is the difference in the level of
standard of living of the citizen before and after privatization?
ii.
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.
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