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IMPACT OF ADEQUATE WORKING CAPITAL ON PROFITABILITY OF BANKS

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IMPACT OF ADEQUATE WORKING CAPITAL ON PROFITABILITY OF BANKS

TABLE OF CONTENT

 

Title page                                                                                             i

Certification                                                                                        ii

Dedication                                                                                          iii

Acknowledgement                                                                              iv

Abstract                                                                                              v

Table of content                                                                                  vi

 

CHAPTER ONE

1.1       Introduction                                                                            1

1.2       Justification of study                                                              2

1.3       Statement of problem                                                                         2 – 3

1.4       Objective of the study                                                            3

1.5       Test for hypothesis                                                                  3

1.6       Research methodology                                                           3

1.7       Scope of the study                                                                  3

1.8       Limitation of the study                                                           3- 4

1.9       Definition of terms                                                                 4

 

CHAPTER TWO

Literature review                                                                     5 – 7

2.0       Introduction                                                                            7 – 8

2.1       History of working capital in banks                                        8

2.2       The banking concepts in Nigeria                                             8

2.3       Component of working capital                                               9 – 10

2.4       Maintenance of credit facility                                                 10 – 12

2.5       Fund management                                                                  12 – 15

2.6       Managing the cash flows                                                        16

2.7       Factors determining the level of profitability of banks          17

2.8       Effect of adequate working capital                                        17

 

CHAPTER THREE

 

3.0       Data collection method                                                           19

 

3.1       Population and sample sizes                                                   20

 

3.2       Sampling techniques                                                               20

 

3.3       Data analysis                                                                           20

 

 

 

CHAPTER FOUR

 

4.0       Data presentation and analysis                                               21

 

4.1       Testing hypothesis                                                                   21 – 24

 

 

 

CHAPTER FIVE

 

5.1       Finding                                                                                    25

 

5.2       Recommendation                                                                    25 – 26

 

5.3       Conclusion                                                                              26

 

5.4       Bibliography                                                                           27

 

Questionnaire                                                                          28 – 29

 

 

 

 

 

 

 

 

CHAPTER ONE

 

 

1.1       INTRODUCTION

 

Many corporate bodies into problems because of mismanagement of working capital and inability to determine the effectiveness of working capital component on the organization performance.

 

Working capital is the backbone of any organization be it finance / bank, manufacturing or trading. It is so because, if working capital of a company is not properly managed, it could lead to the total breakdown and closure of the organization. Hence, management of working capital is being critically analyzed in this research work.

 

Working capital in bank refers to items requires by the banks to ensure efficient delivery of its operation on day-to-day basis. It can be defined as the excess of current asset over current liabilities. Generally, working capital management is concerned with the managing of:

 

 

  1. Current Asset: Which majorly consist of stock, trade debtor’s payment or creditors balance at bank, and cash in hand? Although the component of each variables of current asset depends on the type of industry in question e.g while stock may be subdivided into raw materials, work in progress and finished good. In banking industry their stock is mainly money or cash.

 

  1. Current Liabilities: Trade creditors, accrued, expenses, taxation. Furthermore, cash is an important component of working capital, a pointer to this fact is the even though cash constituted the smallest portion of the total current asset yet management of any organization devotes considerable time to its management. The following are the consequence of efficient management of working capital.

 

  1. Regular operation will not be possible, as inadequacy of funds will course unplanned closure.

 

  1. The incessant slowing down of banking activities leading to inability to needs customers. This may lead to bank customers closing their account and going for other banks that are effective in bank transaction.

 

  • Low level of availability of find may hamper the extension of credit and bring about inability to meet customer with drawals.

 

  1. Deposit that has matured may be impossible to repay which may resort into litigation and consequent upon which bank may be waind up.

 

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