Banking and Finance Project Topics

Impact of Cashless Policy on Banks Liquidity

Impact of Cashless Policy on Banks Liquidity


Impact of Cashless Policy on Banks Liquidity

Content Structure of Impact of Cashless Policy on Banks Liquidity

The abstract contains the research problem, the objectives, methodology, results, and recommendations

  • Chapter one of this thesis or project materials contains the background to the study, the research problem, the research questions, research objectives, research hypotheses, significance of the study, the scope of the study, organization of the study, and the operational definition of terms.
  • Chapter two contains relevant literature on the issue under investigation. The chapter is divided into five parts which are the conceptual review, theoretical review, empirical review, conceptual framework, and gaps in research
  • Chapter three contains the research design, study area, population, sample size and sampling technique, validity, reliability, source of data, operationalization of variables, research models, and data analysis method
  • Chapter four contains the data analysis and the discussion of the findings
  • Chapter five contains the summary of findings, conclusions, recommendations, contributions to knowledge, and recommendations for further studies.
  • References: The references are in APA
  • Questionnaire.

Chapter One Of Impact of Cashless Policy on Banks Liquidity



Cashless economy is an economy where transaction can be done without necessarily carrying physical cash as a mean of exchange of transaction but rather with the use of credit or debit card payment for goods and services. Omotunde et al (2013) posits that cashless economy policy initiative of the Central Bank of Nigeria (CBN) is a move to improve the financial terrain but in the long run sustainability of the policy will be a function of endorsement and compliance by end-users which can which can be aimed at reducing bank liquidity risks. According to Tunde Lemon, the Deputy Governor of CBN, the CBN cash policy stipulates a daily cumulative limit of N150, 000 and N1, 000, 000 on free cash withdrawals and lodgments by individual and corporate customers respectively in the Lagos state since March 30, 2012. Individuals and corporate organizations that make cash transactions above the limits will be charged a service fee for amounts above the cumulative limits. Furthermore, 3rd party cheques above N150, 000 shall not be eligible for encashment over the counter with effect from January 1, 2012. Value for such cheques shall be received through the clearing house. All Nigerian banks were expected to cease cash in transit lodgment services rendered to merchants and customers from January 1, 2012. Omotunde et al (2013) further clarified that the policy through the advanced use of information technology facilitates fund transfer, thereby reducing time wasted in Bank(s). Wizzit, a fast growing mobile banking company in South Africa has over three hundred thousand customers across South Africa. Likewise, M-PESA was introduced in Kenya as a small value electronic system that is accessible from ordinary mobile phones. According to them, it has experienced exceptional growth since its introduction by mobile phone operator (Safaricam) in Kenya in March, 2007 and has already been adopted by nine million customers, which is about 40% of Kenya‟s adult population. Wizzit and other mobile financial services including M-PESA in Kenya are helping low income Africans make financial transaction across long distance with their cell-phones, thereby reducing their travel cost and eliminating the risks of carrying cash and also avoiding most banking charges (Akintaro, 2012).

Banks play a central role in all modern financial systems. To perform it effectively, banks must be safe and be perceived as such. The single most important assurance is for the economic value of a bank’s assets to be worth significantly more than the liabilities that it owes. The difference represents a cushion of “capital” that is available to cover losses of any kind. However, the recent financial crisis underlined the importance of a second type of buffer, the “liquidity” that banks have to cover unexpected cash outflows. A bank can be solvent, holding assets exceeding its liabilities on an economic and accounting basis, and still die a sudden death if its depositors and other funders lose confidence in the institution.


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In banking, liquidity is the ability to meet obligations when they come due without incurring unacceptable losses (Odior & Banuso, 2012). Managing liquidity is a daily process requiring bankers to monitor and project cash flows to ensure adequate liquidity is maintained. Maintaining a balance between short-term assets and short-term liabilities is critical. For an individual bank, clients’ deposits are its primary liabilities (in the sense that the bank is meant to give back all client deposits on demand), whereas reserves and loans are its primary assets (in the sense that these loans are owed to the bank, not by the bank). The investment portfolio represents a smaller portion of assets, and serves as the primary source of liquidity. Investment securities can be liquidated to satisfy deposit withdrawals and increased loan demand. Banks have several additional options for generating liquidity, such as selling loans, borrowing from other banks, borrowing from a central bank, such as the US Federal Reserve bank, and raising additional capital. In a worst-case scenario, depositors may demand their funds when the bank is unable to generate adequate cash without incurring substantial financial losses. In severe cases, this may result in a bank run. Most banks are subject to legally mandated requirements intended to help avoid a liquidity crisis.


Banks can generally maintain as much liquidity as desired because bank deposits are insured by governments in most developed countries. A lack of liquidity can be remedied by raising deposit rates and effectively marketing deposit products. However, an important measure of a bank’s value and success is the cost of liquidity. A bank can attract significant liquid funds. Lower costs generate stronger profits, more stability, and more confidence among depositors, investors, and regulators. This is the first research that is examining the relationship between the cashless policy and bank liquidity in Nigeria.


The following are the objectives of this study:

  1. To examine the impact of cashless policy on banks liquidity.
  2. To examine the effect of cashless policy on the Nigerian economy.
  3. To find out the challenges confronting cashless policy in Nigeria.


  1. What is the impact of cashless policy on banks liquidity?
  2. What is the effect of cashless policy on the Nigerian economy?
  3. What are the challenges confronting cashless policy in Nigeria?


HO: There is no significant relationship between cashless policy and bank liquidity

HA: There is significant relationship between cashless policy and bank liquidity


The following are the significance of this study:

  1. The outcome of this study will educate the bankers and other stakeholders in the management of banks on the relationship between cashless policy and bank liquidity.
  2. This research will be a contribution to the body of literature in the area of the effect of personality trait on student’s academic performance, thereby constituting the empirical literature for future research in the subject area.


This study will cover the relationship between cashless policy and bank liquidity.


Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

 Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work

Download Chapters 1 to 5 PDF



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