Effect of cash management on the profitability of financial institutions: a case of Equity bank Kabalagala branch
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Date
2014-05
Authors
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Publisher
Kampala International University.College of Economics and Management
Abstract
The purpose of the study was to establish the effect of cash management on the
profitability of financial institutions with specific emphasis on establishing the various
cash management techniques, the level of profitability and the relationship between cash
management and profitability of Equity Bank. The research design adopted in this study
was a case study design. The study population included the staff of Equity Bank on
Kabalagala Branch a total of 30 respondents was selected for the study. Simple random
sampling was used to select respondents in the field. The questionnaires were used and
administered to the employees working with the bank. Data from the questionnaires was
coded, entered, edited for consistency and easiness in and later analyzed using Statistical
Package for Social Scientists (SPSS) where correlation was used to establish the
relationship between cash management and profitability of Equity Bank. Regarding the
study findings, it was revealed that cash management in Equity Bank affects profitability
levels. The findings also showed that the bank employs several cash management
techniques in order to reduce fraud of cash in the bank. The study also showed that
profitability levels were high in the bank.
Findings on cash management in Equity Bank, it was revealed that the cash management
techniques are in place but they are not so effective. The bank carries out cash planning , it
prepares cash budgets, tries to maintain some cash balance but its not optimum, all of these
are done by the bank but are not effective.
The researcher recommended that there is need for deploying a cash management system
which involves support and coordination among multiple departments. Banks need to pick
the right cash management provider who can coordinate the physical and technological
installation of the system can significantly expedite and smooth the process of ensuring
profit maximization. Each department should carefully consider features and functionality
that will be required for a successful deployment and utilization of cash management
which also increases profitability.
Description
Research report submitted to the College of Applied Economics and Management Sciences in partial fulfillment of requirements for the award of bachelors degree in Business Administration of Kampala International University
Keywords
Cash, Management, Profitability, Financial, Institutions, Equity bank