ABSTRACT
This project work is carried out to examine the implication of the money transfer system in the economy. The primary objective of this work is therefore to critically examine the money transfer system in the economy.
And this was studied through the use of twelve (12) questionnaires which were administered to banks officials in some areas of the economy. Primary and secondary data were collected from banks in Rivers State. Random sampling method was used to select 12 of the banks. The methods of the data collected are the simple percentage and chi-square test at 0.05 significance level and was presented in tables. It also shows that banks are involved in the importance of money transfer system. In other words, the money transfer system activities are carried out mostly by the banking sector in the economy. But for effective transfer system and the general performance of any business organization there is need to carry out the money transfer research in order to attain the set goals of the economy.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Ever before the origin of what is called money toady, the dominant form of exchange was barter in the primitive societies. Barter can be defined as the exchange of goods for goods or exchange of services for services, for example;
i. If a farmer had cocoa, but wanted groundnut, he had to look for someone who had groundnut and that person with groundnut must want cocoa.
ii. When you agree to do a job for your neighbour does for you, the two of you are bartering, for instance Grace platting Ca-Sandra’s hair, and Ca-Sandra platting Grace’s hair can be regarded as bartering.
But a successful barter transaction required what is called a double coincidence of wants because it was difficult to find one who had what you wanted and wanted what you had.
For instance, it might be difficult for the cocoa farmer to search for the groundnut farmer for exchange of groundnut and secondly, how was the cocoa farmer sure that the groundnut farmer would like to trade her groundnut for cocoa.
These were also other problems of barter that necessitated the origin of money.
1. Indivisibility:- Most of the goods to be exchanged could not be divided into convenient sizes before exchange i.e yam and plantain.
2. Portability:– Most goods were bulky and had to be carried about with difficulty in search of those who wanted them.
3. Durability:– Most goods were difficult to store as wealth or value because of perishable nature e.g cassava, oranges, yam etc.
4. Deferred Payment:– Barter made deferred payment difficult for it did not guarantee the item paid back to be identical size, state and quality as the one borrowed.
5. Exchange Rate:– The determination of the rate of exchange between two commodities was a problem under barter.
6. Self Sufficiency:– Specialization of labour was limited because barter system encouraged self-sufficiency.
1.2 STATEMENT OF THE PROBLEM
Banks in the process of rendering services, transact on money and the other related papers. However, it has been observed that many banks run out of cash exposing their customers to problems. In view of the above statement, one wonders why banks can experience money transfer problems. Therefore, this project is posed to identify the monetary transfer techniques adopted by the economy and suggests way to improve same.
1.3 PURPOSE OF THE STUDY
The primary purpose of this study is to determine the monetary transfer mechanism adopted by the banks in the economy. It will also determine the following:
1. The monetary transfer process in the economy.
2. To identify the problems encountered in the economy in the process of transferring money.
3. It will examine the equipment used in the process of transferring money.
4. It will suggest ways to improve monetary transfer in the economy
5. It will make useful recommendations tat will be useful to the banking industry.
1.4 RESEARCH QUESTIONS
The following questions will be necessary and will help to direct the study.
1. To what extent does monetary transfer hinders the operation of banking industry in the economy?
2. To what extent does money transfer pose problems in the economy?
3. Is there any way to improve the monetary transfer in the bank?
4. How can bank evaluate impact of its monetary transfer system?
1.5 SCOPE/LIMITATION OF THE STUDY
Every study has limit for its relevance or contributions to society. In the light of this, the study will be concentrated on the banking industry in particularly and the economy in general. The choice of bank organizations becomes necessary due to the nature of the research problem which I posed to investigate. One of the problems that may adversely affect the study is lack of data. It is envisaged that some staff in the selected firms will be unwilling to disclose some important information especially when it pertain to their banking policy. Some data may also be said to be classified confidential therefore unavailable to outsiders including to researchers. This may reduce the debt of the study.
Inadequate finance and length of time needed to complete the study will be other obstacles to the research. However, some of the data may be subjected to correction due to errors as a result of the source of their collection. These may be sufficient to invalidate the findings from which references will be made.
1.6 SIGNIFICANCE OF THE STUDY
The importance of banks to the economic development of a nation cannot be over-emphasis. Research is a way of increasing the body of knowledge, which is available for man’s immediate use and posterity (Baridai, 1995:35).
This research will therefore contribute as above in the following ways:
The researched areas in administrative sources will increase the body of knowledge available for man’s use. The research will also bring to focus the importance of banking management or organisation. The study will expose some areas which marketing decision will be concentrated to achieve corporate success. Hence, it will be a guide to strategic managers in the banking sector of the economy.
1.7 DEFINITION OF TERMS
For proper understanding of some of the variable used in this project, some of them are operationally defined as stated below.
1. Money:- Money is anything generally acceptable as mediums or media of exchange.
2. Legal Tender:– Is money tat must be acceptable if offered in payment for a purchase or settlement of debt. Paper money and coins declared by government order or fiat to be legal tender for settlement of all notes and coins in circulation are fiat money.
Commercial Banking
Concept
This is financial intermediary that;
i. Accepts deposits from the public which are subject to transfer by cheques.
ii. Makes loan and allowances to the public by creating credit. It is different from non-bank financial institutions, in that these other institutions cannot create credit though they may be accepting deposits and making advances.
a. Functions
Commercial banks perform a variety of functions which can be divided as:
i. Accepting Deposit:- There are three kinds of deposits they accept from their customers- savings deposits, current deposits, fixed or time deposit – and pay small and big interest on these deposits except current deposits.
ii. Advancing loan: – It advances loans in the following ways; cash credit, ordinary loan, overdraft, discounting bills of exchange. The bank lends a certain % of cash lying in deposits to its customers on a higher interest rate than it pays on such deposits to depositors. This is how it earns profit and carries on its business.