ABSTRACT

This study sought to evaluate the impact of fund management on the sustainability of capital in commercial banks, with a focus on UBA Bank Yaounde. The research employed a descriptive research design, and data collection was carried out using questionnaires. The study considered several determinants, specifically cash management, payables management, and receivables management. The parameters were estimated using descriptive statistics and the logit regression analysis method. The findings revealed that cash management, payables management, and receivables management have a positive and significant influence on the capital sustainability of UBA Bank. This suggests that these aspects of fund management, namely cash management, receivables management, and payables management, can be considered critical factors contributing to the capital sustainability of UBA Bank Yaounde.

CHAPTER ONE: GENERAL INTRODUCTION

INTRODUCTION

This study is structured into five interrelated chapters. Chapter one serves as an introduction to the research and encompasses the background of the study, statement of the problem, objectives of the study (both general and specific), research hypotheses, significance of the study, and the organization of the study. Chapter two delves into a literature review, focusing on conceptual review, theoretical review, empirical review, and identifying knowledge gaps and contributions. The third chapter outlines the methodology employed in the study, covering the scope of the research, research design, data sources and collection methods, model specification, model estimation, variables and their operationalization, pre-estimated tests, validity, and reliability. Chapter four presents the results obtained, and finally, chapter five discusses the findings, draws conclusions, makes recommendations, highlights the limitations of the study, and suggests avenues for future research.

1.1 Background of the Study

Financial institutions in the Cameroonian context encompass banks, leasing companies, insurance firms, pension funds, and provident institutions, all of which play a crucial role in the nation’s economic landscape. A comprehensive understanding of banking necessitates grasping the concept of a bank and its operations. Banking, according to Alabi, encompasses a spectrum of services provided by banks to individuals and businesses. These services include maintaining cheque accounts, savings accounts, and time deposits, as well as extending loans to customers and businesses, along with essential cash management services such as check cashing and foreign currency exchange (Marcus Garvey Orji et al., 2016).

Commercial banks serve as intermediaries in the financial realm, collecting money from one group and disbursing it to another. In this process, banks aim to structure their assets and liabilities to achieve maximum returns. Fund management is pivotal in this endeavor, ensuring optimal cash availability and interest income on idle funds. Effective fund management plays a critical role in a bank’s liquidity, capital preservation, and profitability (Marcus Garvey Orji et al., 2016).

Banking institutions hold significant importance within a country’s economic landscape, functioning as retail banking units that facilitate the transfer of financial assets. They are crucial in mobilizing resources and are an integral part of the financial system. Regardless of a country’s level of development, the banking system holds a pivotal role in its economy (ASA University Review, January-June 2012).

Fund management in banking involves the administration of funds to maintain capital, liquidity, profitability, and solvency. It is essential to make decisions concerning fund allocation for short to intermediate-term goals in the banking sector (Hoque, 1989).

1.2 Statement of the Problem

Despite the significance of financial institutions in the Cameroonian economy, there have been challenges and concerns affecting the banking sector. Notably, public confidence has been eroded due to banking distress that has plagued the financial sector in recent decades. Furthermore, increased competition in the banking industry, driven by the emergence of numerous new banks, has placed pressure on existing banks to maintain profitability and meet their depositors’ financial demands while ensuring adequate liquidity. Achieving this balance is a challenge, as each of these objectives—liquidity, capital survival, and profitability—may have different impacts on overall bank performance (Research Journal of Finance and Accounting, 2011).

Previous research has explored the internal and external determinants of a bank’s profitability and the main risks affecting a bank’s capital. However, there is limited research that has specifically examined the impact of fund management on capital survival within a bank. Despite having sound fund management systems in place, banks often encounter issues, such as risk defaults, weak management systems, conflicting capital requirements, and inefficiencies in internal control systems. This study seeks to investigate why banks face problems related to capital survival and liquidity despite their fund management systems (Research Journal of Finance and Accounting, 2011).

1.3 Objectives of the Study

1.3.1 Main Research Objective

The primary objective of this study is to comprehensively assess the impact of fund management on the capital survival of commercial banks. The study focuses on a specific case, UBA Bank Yaounde.

1.3.2 Specific Research Objectives

The specific research objectives include:

1. To evaluate the effect of cash management performance on the capital survival of UBA Yaounde.

2. To assess the impact of payables management on the capital survival of UBA Yaounde.

3. To examine the influence of receivables management on the capital survival of UBA Yaounde.