Measuring the Impact of Treasury Single Account on the Failure of Financial Institutions

Kenneth Enoch Okpala, Oyinlola Akinyede, Temitope Mariam Worimegbe

Abstract


Structured abstract

Purpose: This paper evaluated the impact treasury single accounts on the failure of financial institutions in Nigeria. The objective was to determine the influence of the huge cash extraction from Deposit Money Banks which reduced the amount of cash in circulation. The exercise threw most of the commercial banks and the associated institutions financially off balance which negatively affected banks liquidity level and its ability to create credits. The issue also increased bank lending rate, triggered off staffs downsizes which worsen the unemployment situation in the first quarter of 2017 and was perceived to affect the real sector at the long run.

Design/Methodology/approach: A survey research design approach was adopted and 450 participants were used as the study population. Primary data were collected through copies of questionnaire administered and 325 valid responses were returned and analyzed. The response rate of 72% achieved was considered good enough for the analysis. Regression analysis technique with the aid of E-view (Version 9.5) was employed to measure the strength of the relationship between the variables.

Findings: Evidence obtained from the analysis results confirmed that deposit money bank liquidity crisis has significant effect on other financial institution liquidity crunch (R = .868 R2 = 854; P < .05) and Treasury single account (TSA) has significant impact on the failure of financial institutions (R = 0.878; R2 = 872; P < .05). Therefore all null hypotheses were rejected and the alternates not rejected.

Research limitations: This study has two known limitations. The first is the size of the population (30 top financial institutions (distributed among deposit money banks, insurance and investment companies). This is regarded as small compare to the total population. Second, the study concentrated on a sub-sector of Nigeria economy. Result may vary if other sectors affected by the treasury single accounts exercise are included in the study.

Practical implications: The two hypotheses developed and tested indicated that the sub variables of the independent have significant impacts on the dependent variable. The study concluded that Treasury single account (TSA) has significant influence on the failure of financial institutions in Nigeria. This is because deposit money bank liquidity crisis would negatively propel all financial institutions liquidity crunch through multiplier effect. Therefore the study concluded that Treasury single account had reliably predicted the failure of financial institutions in Nigeria.

Originality/ Value: To the best this researcher’s knowledge, no study was conducted to examine the relationship between treasury single accounts and failure of financial institutions. This has prevented conclusion in this direction. In order to address the identified gaps in the literature created by the omission, this study developed two hypotheses to enable the researcher explore the influence of TSA on the failure of financial institutions in Nigeria. The study first examined the linkage between liquidity problem of DMBs and that of other financial institutions and then the impact of TSA on the failure of financial institutions.

 

Keywords: Treasury single account; Liquidity crisis; Financial institutions; financial institutions failures

 

[PT]

Título: "Medindo o Impacto da Conta Única do Tesouro sobre o Fracasso das Instituições Financeiras"

Resumo

Objetivo: Este artigo avaliou o impacto das contas únicas do tesouro sobre o fracasso das instituições financeiras na Nigéria. O objetivo era determinar a influência da enorme extração de dinheiro dos Bancos de Depósito em Dinheiro, o que reduziu a quantidade de dinheiro em circulação. O exercício reduziu financeiramente a maioria dos bancos comerciais e as instituições associadas, o que afetou negativamente o nível de liquidez dos bancos e sua capacidade de criar créditos. A questão também aumentou a taxa de empréstimos bancários, desencadeou reduções de pessoal, o que piora a situação de desemprego no primeiro trimestre de 2017 e foi percebido como afetando o setor real a longo prazo.

Desenho/metodologia/abordagem: Foi adotada uma abordagem de design de pesquisa de pesquisa. A população do estudo consiste em 99 instituições financeiras no diretório de negócios da Nigéria. 30 empresas com 450 funcionários da gerência foram utilizadas como amostra do estudo. Os dados primários foram coletados através de cópias do questionário administrado e 325 respostas válidas foram retornadas e analisadas. A taxa de resposta de 72% alcançada foi considerada boa o suficiente para a análise. A técnica de análise de regressão com o auxílio de E-views (Versão 9.5) foi empregada para medir a força do relacionamento entre as variáveis.

Resultados: As evidências obtidas a partir dos resultados da análise confirmaram que a crise de liquidez dos bancos monetários de depósitos tem efeito significativo sobre a crise de liquidez de outras instituições financeiras (R = 0,868 R2 = 854; P <0,05) e a conta única do Tesouro (TSA) tem um impacto significativo no falência de instituições financeiras (R = 0,878; R2 = 872; P <0,05). Portanto, todas as hipóteses nulas foram rejeitadas e os suplentes não rejeitados.

Limitações: Este estudo tem duas limitações conhecidas. O primeiro é o tamanho da população (30 principais instituições financeiras (distribuídas entre bancos depositários, seguradoras e empresas de investimento), considerado pequeno em comparação com o total da população. Segundo, o estudo concentrou-se em um subsetor da economia da Nigéria O resultado pode variar se outros setores afetados pelo exercício de contas únicas do tesouro forem incluídos no estudo.

Implicações: As duas hipóteses desenvolvidas e testadas indicaram que as sub-variáveis dos independentes têm impactos significativos na variável dependente. O estudo concluiu que a conta única do Tesouro (TSA) tem influência significativa sobre o fracasso das instituições financeiras na Nigéria. Isso ocorre porque a crise de liquidez dos bancos monetários impulsionaria negativamente toda a crise de liquidez das instituições financeiras através do efeito multiplicador. Portanto, o estudo concluiu que a conta única do Tesouro previu de maneira confiável o fracasso das instituições financeiras na Nigéria.

Originalidade/valor: para o melhor conhecimento deste pesquisador, não foi realizado um estudo para examinar a relação entre contas únicas do tesouro e falhas de instituições financeiras. Isso impediu a conclusão nessa direção. A fim de abordar as lacunas identificadas na literatura criada pela omissão, este estudo desenvolveu duas hipóteses para permitir ao pesquisador explorar a influência da TSA no fracasso de instituições financeiras na Nigéria. O estudo examinou primeiro a ligação entre o problema de liquidez dos DMBs e o de outras instituições financeiras e, em seguida, o impacto da TSA no fracasso das instituições financeiras.

 

Keywords: conta única do Tesouro; Crise de liquidez; Instituições financeiras; falhas de instituições financeiras

 

 


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References


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