An analysis of monetary policy on public financial management in karamoja a case study of centenary bank moroto:
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Date
2019-09
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Kampala International University, College of Economics and Management.
Abstract
This study was undertaken to assess the effect of monetary policy on public financial management
of commercial banks taking a case of Centenary bank Uganda Limited, The study was guided by a
cross sectional case study research design. The researcher used simple random sampling for
banking/credit/loan officers and clients of Centenary bank and purposive sampling for branch
managers and heads of departments. The researcher selected 70 participants as the sample for the
study. The study found out that liquidity management practices at Centenary bank limited include;
storage of cash, supply or withdraws of liquidity consistent with desired level of reserve money
from market, daily assessment of liquidity conditions, as well as daily analysis and detailed
estimation of the size and timing of cash inflows and outflows. It also found out that~; Centenary
bank regularly monitors the quality of its assets, and also continuously captures large maturity
mismatches to enhance profitability potential, Centenary bank; has a team that regularly monitors
international financial trends, as well as closely monitoring liquidity in macroeconomic platfoi’m;
Centenary bank has a system that improves capital adequacy, governance and liquidity risk, the
bank also enhances transparency of its operations of credit as well as ensuring that reserves of
liquid assets are sufficient to withstand adverse liquidity shocks. The study also found out that
liquidity; is a precondition for daily operation, it affects bank operation, may lead banks to miss
on incentives given by suppliers of credit, service and goods; adoption of liquidity strategies
increases ROA, liquidity management ensures successful operations. improves earnings and
capital; distressed banks only access funds from market at high interest rates which reduces
profitability and the ration of liquid assets to customer and short term funding is positively related
to ROA. From the findings, the following recommendation were therefore made; (i)There is a
need to invest the excess of liquidity available at the banks; (ii) Commercial banks should adopt a
general framework for liquidity management; (iii) Banks need to adopt of a scientific methods in
detection of the strengths and weaknesses points of liquidity; (iv) Bank managers should identify
and monitor key business drivers; (v) Bank officials should be trained in the areas of liquidity
management; (v) Bank managers should be forward looking, and focus on operational efficiency
of the banking industry; (vi) High quality liquidity assets buffer sufficient to hedge sudden
liquidity outflows should be maintained; and (vii) Banks should adopt optimum liquidity model
for maximum return on investment, survival, stability, growth and development of banking system
in Uganda.
Description
a research report submitted to the college of economics and management as a requirement for the partial fulfillment of the award of a bachelor’s degree in business administration at Kampala international university.
Keywords
monetary policy, public financial management, karamoja