WORKING CAPITAL MANAGEMENT IN THE BANKING SECTOR: BANKING FINANCE PROJECTS
Abstract
Working capital is known to be the backbone and lifeblood of any business organization around the world. Efficient working capital management is therefore essential to reduce recurring incidents/banking crisis incidents. As a result, this project sought to provide an illustrative discussion of the management of continuity industry improvement work to improve continuity in the banking industry, with particular interest in United Bank for Africa plc Surulere, Lagos.
In this way, there were suggestions on how bank managers should deal with banks showing signs of financial difficulties.
The conclusions drawn from this study are both good and useful.
chapter One
Foreword
1.1 Research background
Working capital management is essential to managing bank checking accounts. This includes not only current assets, but also current assets and current liabilities. It explains the various forms of adjustments to working capital and short-term debt that banks can make to meet their working capital requirements. There are two types of working capital: gross and net.
Gross type refers to a bank’s investment in working capital. H. Assets that can be converted into cash within the financial year, such as bills, debt securities, stocks and cash.
Net type is the difference between current assets and current liabilities. Current liabilities are receivables from outside parties that are expected to become due within the financial year. B. Accounts Payable, Overdrafts, and Bills Payable. Net working capital occurs when current assets exceed current liabilities.
Working capital management is one of the most important aspects of a bank’s overall financial management. Efficiency in this area is necessary to ensure the long-term success of the bank and to achieve its overarching goal of maximizing owner wealth.
To operate in the banking industry, a certain amount of working capital is required. This level of a bank’s working capital represents the cash holdings or cash equivalent holdings or cash equivalent assets required of the bank by government regulation. If you are allowed to keep everything in cash, that is idle cash.
The main purpose of establishing a commercial bank is to benefit shareholders. In this regard, banks and other commercial enterprises strive to increase their net income and the present value of their assets. While this is recognized, the immediate concern of bankers is to provide satisfactory returns to shareholders. This requires holding a sufficient amount of safe and productive assets and financing through fast-moving and available expensive sources of funding.
However, it should be noted that the bank does not have full control over most of its assets and liabilities. In reality, banks have partial control over some liquid assets and current liabilities, absolute control, but not complete control. controlling others. Within these business frameworks and perspectives, banks must make various adjustments to achieve their long-term goals.
In the previous paragraph, he said that working capital has two concepts: gross working capital and net working capital. have the same meaning.
The working capital needs for the day-to-day activities of banking cannot be overstated. Few banks or other companies do not require working capital. Banks need to generate sufficient profits from their operations to meet stated objectives, including maximizing shareholders’ wealth. This avoids the recent problems facing banks today, which are largely due to insufficient working capital. In order to be successful in business, banks must invest adequately in liquid assets.
The bank’s inability to meet individual/customer claims causes a spiral of technical bankruptcy. This theory, profitability theory, was developed to avoid sticky situations such as liquidity, technical bankruptcy, high risk and low profit. Formulated by the industry. 1.2 Problem Description
Many banks are unable to effectively and efficiently manage their working capital to meet the needs of their customers. Their bank managers are constantly faced with difficult problems in trying to match the level of investment of incumbents in their banks. The problem is actually related to
(1) Insufficient liquidity reserves
(2) inadequate management of available funds;
(3) failure to comply with rules and regulations when lending to customers;
(4) failure to make timely payments on loans to customers, and in some cases no payment at all;
(5) Depositors constantly withdrawing money deposited in banks due to lack of customer confidence. (6) Voluntary restraint of deposits in banks due to the continuing difficulties of banks by some bank customers.
1.3 Purpose of the survey
(a) knowing whether working capital management affects a bank’s liquidity;
(b) Find out what caused bankruptcies or why the banking industry is understaffed today.
(c) knowing whether working capital management affects bank profitability;
(d) how the bank’s management manages the bank’s current accounts;
(e) Examine whether long-term positions affect bank operations. (f) to examine the adequacy of a bank’s working capital;
1.4 Research question
(a) How is working capital managed at UBA Plc Surulere in Lagos?
(b) Is there sufficient working capital for the bank’s operations?
(c) UBA Plc Surulere, Lagos management (officers) will use available working capital reasonably.
(d) If UBA Plc Surulere in Lagos has good working capital management, does it contribute to the profitability of the bank?
(e) How would the borrower react to such an offer from the bank?
(f) How do customers react to the bank’s practices? 1.5 Research hypothesis
In these research hypotheses, the null hypothesis is denoted by HO and the alternative hypothesis by Hi.
1.HO:
United Bank for Africa Plc’s working capital management impacts the bank’s liquidity.
Hi:
United Bank for Africa’s working capital management will not impact bank liquidity
2.HO:
It is enough if the working capital of the bank can be managed efficiently.
3. E:
Long-term vs. short-term lending Lending methods are not favorable to banks.
4. Ho:
United Bank for Africa Plc should no longer employ well-trained staff.
5. Hello:
United Bank for Africa needs to hire better trained staff to improve productivity.
1.6 Significance or Justification of Research
Working capital management at United Bank for Africa plc Surulere, Lagos means a lot. These are:
(i) Research on this project topic gives researchers the opportunity to learn about and thereby exhaust the most dynamic and competitive techniques of working capital management.
(ii) serve as a database of information about current valuation practices;
(iii) The study contributes/results in expanding know-how in the areas of risk mitigation and liquidity management.
(iv) Useful and utilized for the operation of centralized management
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