Cash Management of Rural Banks: the Case of Adonten Community Bank (January 2005-December 2005)
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Date
2007
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Abstract
This paper examined the cash management policies and techniques of rural banks in Ghana. The researcher designed the research to look at the float management techniques, collection techniques disbursement control and investment of idle cash. Specifically, relevant data from the Adonten Community Bank within the period of Ist January 2005 to 31st December 2005 were collected using a questionnaire. The data collected was analysed using the Statistical Package for Social Sciences (SPSS). The following are the arguments that the paper uniquely put forward after the analysis o the empirical data: that the collections and disbursements activities of the rural banks did not create any float; that disbursements were always higher than collections; that the difference
collections and disbursements was very significant; that there was no relationship between
collections and disbursement. These findings imply that the banks' working capital will soon
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diminish to the extent that management will have to use retained earnings or raise debt or equity capital to finance its operations. Interestingly, the findings did not support an earlier assertion that collection and disbursement activities generally create float. In addition, the findings also sharply contrast the assumption that collections should exceed disbursements at all times. The researcher believes that the greatest limitation of this paper is perhaps the use of only one rural bank; therefore, the findings may not be reflective of all rural banks in Ghana.
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A Long Essay submitted to the School of Business, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the award of the degree of Master of Business Administration,