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.