ANALYSIS OF CASH DEPOSITS PATTERN IN COMMERCIAL BANKS

ABSTRACT

The success or failure and effectiveness or ineffectiveness of any banking or financial sector depends on extent of customer’s patronage and the financial resources available to form and procure the required service oriented facilities. In Nigeria, there are lots of problems associated with banking. The problems include in adequate financial capacity, that is weak capital base, lack of sound technical planning, bad implementation of formulated policies linking the banking operations, inadequate supervision and monitoring of economic changes and large scale financial embezzlement. Due to these problems, many financial firms are distressed and subsequently are closed up. The study therefore examined the cash deposits pattern of commercial banks for the past 10 years with fidelity bank Plc, Owerri as a case study. Data used for this technical research were obtained from secondary source these data were out-puts of cash deposits of customers patronizing fidelity bank plc Owerri from 1998-2007. The data was systematically analyzed using time series models. The study found that there is an annual decrease in the rate of cash deposit patterns in fidelity bank plc Owerri as a study unit of commercial banks. Finally, the study suggested some solutions and also made some fine and worthy recommendations.

CHAPTER ONE

1.0 INTRODUCTION
The need to monitor, evaluate and make adequate plans for the future compels managers, scientist of various calling and researchers alike to collect data on regular basis on processes that vary as time passes. Observations on such processes when arranged in chronological order (in time sequence) are called time series. A time series is a group of data that has been collected successively over a period of time. Some examples of time series are: the daily cash-deposits of customers, the weekly recorded cash-deposits of the bank, and the weekly or monthly stock levels of a company, the number of patients treated by a particular hospital per annum.
The method of analyzing and interpreting these data is referred to as time series analysis. Time series analysis is very important in business and economic for forecasting purposes. 
As we tend to base our forecast of cash-deposit results on what has happened in the past. The statistical series which tells us how data has been behaving in the past is the time series. It gives us the values of variable we are considering at various points in time each year for the last ten years. Time series may be classified as follows:
SECULAR TREND: This is refers to the general direction in which the figures appears to the going over a long interval of time. It is important to distinguish between trends resulting from cyclical influence on the economy. Example, a change in task of customers buying habits. The observation of a secular trend might show an upward trend or downward trend or a steady trend.
SEASONAL VARIATIONS: It is a common knowledge and a clear view to all that the value of many variables depends partly on the time of the year in question, every one knows that the rate of cash-deposits of customers is usually high in the month of March to November, during which customers stock their cash in banks, that is in order of months.
CYCLICAL VARIATION: As the economy expands during the period of boom, we would expect to find that such data like cash-deposits, cash withdrawals or customers expenditure and sells rate will show a rising trend, and during the period of slump, we would expect them to show downward trend. Thus a wave-like motion may be observed in the pattern of our data.
IRREGULAR VARIATION: These are random external events which affects our variables. May are also referred to as random variations because they result from sporadic events such as strikes, earth-quakes, floods, fire disaster, riots and this events are unpredictable.
It is very clear that time series analysis will help in finding the trend to guide this industry or sector in forecasting and other management decisions that pertain to competition. In order to create a conducive condition or climate favourable for business, sponsoring the national football league and all national volley ball league or basket ball league is just a few. Their management slogan is “We keep our word”.

1.1 STATEMENT OF THE PROBLEM
Cash-deposits and withdrawals are the main determinant of banks financial status. In a highly competitive industry like the banking sector, this issue posses some serious challenges and responsibilities to baking sector which also the fidelity bank plc Owerri is a victim.
What is their recorded cash-deposit level and level of financial base? Do these records not measure up to the standard that merited them their position in the financial or banking sector? Analysis made on the cash-deposits transactions are only information services, and as such must be conditioned by the process to which they are applied unless that may only lead to false sense in the industries. It is in the light of these questions that I wish to carry out this research.

1.2 PURPOSE OF THE STUDY
The purpose of the study is due to the growing need to monitor the performance of an economy. Time series analysis is used to determine, the trend of deposit which might be use to forecast or predict future results.
Managers and governments need an understanding of the past and current pattern of change in the cash-deposit rates and provide clues about future patterns to aid in forecasting.
This study is initiated out of the desire to provide to those who may need it, as a basis for forecasting and decision making, which are tools for economy growth and standardization.

1.3 STATEMENT OF HYPOTHESIS
A study of this nature of phenomena will require stating some hypothesis.
Hypothesis is a statement which stands to be opposed or supported depending on the outcome of the result of the analysis.
H0: There is no significant difference on cash-deposits for the past ten years.
H1: There is significant difference on cash-deposits for the past ten years.
H0: There is no growth in the cash-deposits rate.
H1: There is growth in the cash-deposits rate.
Ho: There is no significant change on the cash deposit output rate in time series data.
H1: There is significant change on the cash deposit output rate in time series data.

1.4 SCOPE OF THE STUDY
This study is limited to the cash-deposits made at fidelity bank Plc, Owerri and it covers a period of ten (10) years from 1998 to 2007.

1.5 LIMITATIONS OF THE STUDY
The financial or banking sector has been characterized by strict and uncompromising competition and rivalry. Due to this, basic information relating to cash-deposits and withdrawal are always treated in strict confidence. This is one of the set backs or problems encountered in the course of the data collection from the sector.
Management uneasy compliance to release the authentic data for the fear of other sister industries having knowledge of their financial performance and level of their been patronized by customers since they are in a competitive environment, contributed a hydra-headed limitation to this research.

1.6 SIGNIFICANCE OF THE STUDY
The significance of this great effort is to examine the rate of cash-deposits in the Fidelity Bank Plc, Owerri, it is very relevant to both management and staff of the company. It is believed that it will help management and staff to plan effectively for desirable change and improvement geared towards accessing and revealing the strength and weakness of the cash-deposits segment of fidelity Bank Plc, Owerri.

1.7 OBJECTIVE OF THE STUDY
To examine the cash-deposits pattern of fidelity bank, which forms the basis for its growth? 
To determine the trend of its cash-deposits rate and use it to forecast future estimates. 
To deseasonalize the data on cash-deposits recorded from 1998-2007.
To offer suggestions and remedies for improvement on banking.

1.8 DEFINITION OF TERMS
Cash deposit here refers to the action of bank customers putting their money into their bank accounts for safe keeping and other numerous purposes.
Traditionally, the term “Cash-deposits” refers to the act of financial collection and recording by financial institutions. Banks use these deposits collected from customers for business such as lending out money to both governmental bodies and non-governmental bodies and in return creates more money due to the interest rate attached to the loan, etc.
For the purpose of this work, a “time series” refers to record of the values or a collection of observations of a random process made sequentially in time. Usually at equal interval.