Performance Assessment and Investment Decisions in Nigeria Commercial Bank: a Case Study of First Bank
CHAPTER ONE
OBJECTIVES OF THE STUDY
The general objective of this study is to analyze the relationship between performance assessment and investment decision in First bank of Nigeria Limited and the following the specific objectives:
- To examine the relationship between performance assessment and investment decision in First bank of Nigeria Limited.
- To investigate strategies that can be adopted in conducting an effective performance assessment.
- To find out the factors that can influence investment decisions.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
The financing decision is concerned with the raising of funds that finance assets. The major sources of long-term capital are shares and debentures. Funds can also be obtained in the form of term loans and leases, as the latter serves as an alternative to borrowing. If sufficient funds are not raised domestically, they are obtained from sources abroad. Financial strategy consists of three interrelated kinds of decisions: investment, funding and working capital decisions (Ross et al., 2000). Investment decisions relate to the allocation of capital to carry out investment opportunities that are valuable (bring value) to the company, taking into account the magnitude, opportunity and risk of the future cash flows of investment. Funding decisions concern the specific mix of long-term debt and capital that the company uses to finance its operations, i.e., optimal capital structure. Working-capital decisions include the management of short-term assets and liabilities in a way that ensures the adequacy of resources for company operations. Assuming the corporate aim is to maximize profits, it is important for businesses to seek the optimum combination of the three kinds of financial decisions. Mallette (2006) argues that an organization’s financial strategy is so important to the company that it must be evaluated and adjusted as frequently as the operational strategy. He also says that the evaluation of financial strategies must be consistent with operations, needs and specificities of the business. The description of financial practices carried out by businesses represents an issue that has received more attention. Valencia et al. (2006) published a study of financial practices in Mexican firms taking into account the organizations’ characteristics. They found that most enterprises establish an optimal leverage ratio, use investment evaluation techniques, have traditional management based on budgets and the return on investments (ROI), do not use techniques such as EVA or BSC, and apply financial ratios as a technique to analyze profitability. Jog and Srivastava (1994) conducted a study that looked at financial decision-making processes that Canadian companies followed, as well as techniques they used to make decisions on capital budget, financing costs and sources, and dividends. Their results show that investment decisions are closely related to funding opportunities, and that the method used for the capital budget is the internal rate of return and the net present value. They also found that most Canadian companies determine an optimal debt and equity ratio. With regard to dividends decisions, present and future earnings represent the most relevant factors enterprises consider when deciding on dividend policy. Another group of studies analyzed firms’ use of certain financial analysis techniques.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to performance assessment and investment decisions in Nigeria commercial bank.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain performance assessment and investment decisions in Nigeria commercial bank: a case study of first bank
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of performance assessment and investment decisions in Nigeria commercial bank
Summary
This study was on a study of performance assessment and investment decisions in Nigeria commercial bank: a case study of first bank. Three objectives were raised which included: To examine the relationship between performance assessment and investment decision in First bank of Nigeria Limited, to investigate strategies that can be adopted in conducting an effective performance assessment, to find out the factors that can influence investment decisions. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of selected first bank in Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up HRMs, customer care officers, marketers and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
The results shown in this study revealed that the main financial decision that is of paramount importance to the commercial banks in Nigeria is the investment decision. Also, finance decision of the banks has potential to reduce the profit of the banks if not addressed. More importantly the importance of financial decisions in performance of commercial banks is very crucial for future progress and development and success. It is against this background that these recommendations were made that banks should pay more attention to other financing decisions such as dividend and liquidity in order to keep the banks at high level of performance which is crucial to their sustainability. Also, a policy on efficient management should be put in place for bank operational expenses. This should be done by finding ways to obtain the optimal utilization of resources during production of banking products and services and efficient use, incorporation and management of all the financial decisions
Recommendation
That banks should pay more attention to other financing decisions such as dividend and liquidity in order to keep the banks at high level of performance which is crucial to their sustainability. Also, a policy on efficient management should be put in place for bank operational expenses. This should be done by finding ways to obtain the optimal utilization of resources during production of banking products and services and efficient use, incorporation and management of all the financial decisions
REFERENCES
- Adepoju, O.I (2006): The Impact of Financial Decisions on The Profit Margin of Selected Commercial Banks in Nigeria. Unpublished Master’s Thesis. Department of Management Sciences. LAUTECH, Ogbomoso.
- Adepoju, O.I and Onaolapo A.A (2012): The Effect of Financial Decisions on The Profit Margin of Selected Commercial Banks in Lagos, Nigeria. Paper presented at the 3rd ICBE Conference, Cape Town South Africa.
- Adeusi, S. O., Akeke, N. I., Aribaba, F. O., and Simeon, A. O., (2013): Corporate Governance and Firm Financial Performance: Do Ownership and Board Size Matter?
- Almedani M. (2004): ‘Incorporated Finance Management’. Fourth Edition. Dar Al Obeikan Publishers, AmmanJordan.
- Alslehat Z. and Altahtamouni F. (2014): ‘The Causal Relationship between Financial Decisions and their Impact on Financial Performance.’ International Journal of Academic Research in Accounting, Finance and Management Sciences. Vol 4, No. 2, 76-84.
- Altahtamouni F. (2005): ‘The Effect of the Determinants of Capital Structure on Return and value of the companies: An Applied study on industrial and service companies listed on the Amman Stock Exchange’. Unpublished Ph.D thesis.
- Ciancanelli, P. and Gonzalez, J. A. R.., (2000): Corporate Governance in Banking: A Conceptual Framework, Social Science Research Network, Electronic Paper Collection: http://www.papers.ssrn.com/paper.taf Fraser S. et al (2015): What do we know about Entrepreneurial Finance and its Relationship with Growth? International Small Business Journal, 33(1), 70-88. ISSN 1741-2870.
