Research proposal to evaluate the impact of cash management techniques on the profitability of Standard Chartered
Now days the banking industry is dealing with so many industries and fulfilling the financial needs of the companies. The industrial development has put down the pressure on banking industry to meet out the demand of so many organizations as well as deal with households and premium retail customers. In such scenario managing the liquidity is one of the major challenges for the organizations. Thus here in this scenario the significance of cash management will be depicted in an appropriate manner. The Cash management is a phenomenon where organizations decide about how the liquid capital could be used in the best way (Brigham and Houston, 2013). Cash management is a broad term that covers a number of functions that help individuals and businesses process receipts and payments in an organized and efficient manner. Further here in this scenario the impact of cash management on the profitability will also investigated with relevance to Standard Chartered bank. The competition is immense in banking industry so cash management has become effective tool to manage the liquidity and ensuring the appropriate usage of financial resources. In return it could lead towards the increment in profitability of any bank. Thus these are certain major aspects that will gain huge consideration in current scenario.
Aims and objectives:
Aims:The purpose of the study is to evaluate the impact of cash management techniques on the profitability of Standard Chartered.
- To identify and analyze the various cash management techniques used by Standard Chartered
- To establish the relationship between cash management techniques and profitability of Standard Chartered
- To suggest appropriate cash management techniques Standard Chartered for maximising profits
- What are the various cash management techniques used by Standard Chartered?
- How cash management and profitability of Standard Chartered is related to each another?
Significance of the study:
The significance of this study is very wide as it covers the very crucial aspects of banking industry. It provides the overview about the way in which the international banks can improve their profitability ratio. Another importance of this study is to understand the concept of cash management and its relevancy with the profitability. The profitability of banking industry affects the whole economy so the outcomes of this study could be beneficial for the perspective of understanding the economic aspects as well. Through gaining the proper knowledge about cash management techniques, the hold on one aspects of financial management could be ensured.
Banking industry is now active into the various kinds of activities and there is huge requirement of focusing upon the proper management techniques that can lead proper utilization of financial resources. Cash is the major resource for the banking industry as it involves the transactions on the regular basis. Thus cash management is the main solution for the purpose of dealing with controlling and handling of cash. The major benefit of cash management is that it covers the broad area like cash inflow, investment aspects, managing the liquidity. Ahead it is also clear that the role of cash management is very huge in avoiding the financial irregularities and most importantly the reporting of cash into the financial statements could also done in an appropriate manner. The most basic importance of cash management is that it improves the accounting process within the company (Cornwall, Vang and Hartman, 2013). Thus in order to improve the financial aspects the banks should rely on cash management.
Proper management of cash could be done through various ways. The major one is that the budgeting must be done in an appropriate manner. In banks the budgeting should gain huge priority as it involves the determination of various expenses as per the requirement of bank. It helps on the ground of bringing the hold on company’s expenses and the improvement in financial position could be ensured. Various models for the purpose of cash management are Miller-orr cash management model, Baumaol model etc. These models could be helpful in various ways. The applications of these models can allow a banking firm to understand their business model and cash could be managed appropriately (Fethi, 2012). The Baumel is very much significant various ways. Most importantly it provides the information about the idle cash which company is having within their treasure. Further the investment aspects could also become clear in proper manner. In banks the situation of idle cash remains problematic as they need to invest that money so that some sort of extra income could be generated. Thus it could be said that this model is highly useful in determining the optimum level of cash holding with banks.
The banks have to deal with high level of fluctuations within their cash inflow and outflow. So in order to deal with certain aspects there is huge requirement of focusing upon the application of Millar –Orr model. It provides the clear scenario about the cash flow situation. The banks can definitely identify that what amount they need to given on credit and how much they should have with them in the form of liquidity? Thus these aspects could become clear in very easy manner. The major impact of cash management is that it always leads towards the high level of profitability for the company (Hull, 2012). It is to acknowledge that if the cash is utilized in an appropriate manner then it always generates maximum return for the banks and in result the profitability could be enhanced. The cash must be handled in proper and every decision making related to it should gain huge priority in terms discipline. According to Kensinger (2012) it is clear that two major positive impact of cash management is that the planning for the availability of cash could be done in priori and the situations could be dealt in effective way. Second impact related to profitability is that the organization can definitely get hold on problems related to shortage of cash (Kensinger, 2012). Thus in this way the cash management has all the solutions that could put its adverse impact at the availability of fund at crucial juncture of business operations. Through cash management the decision between holding the cash for investment purpose and trading it off for gaining the opportunity by not holding it could become easier. This decision seems to be very tough for maximum banks as they need to fulfill the demand of customers on the regular basis. Another impact on profitability is that cash management has direct relationship with the identifying the short term as well as long term financial needs of the company and decisions related to investment of money could become easier. The ratio analysis could be done in effective manner (Ruozi and Ferrari, 2012). Therefore it is a clear description about the cash management and its impact on banking firm’s profitability.
Brigham, E. and Houston, J. (2013). Fundamentals of financial management. Mason, Ohio: South-Western.
Cornwall, J., Vang, D. and Hartman, J. (2013). Entrepreneurial financial management. Armonk, N.Y.: M.E. Sharpe.
Fethi, M. (2012). Financial services. Hauppauge, NY: Nova Science Publishers.
Hull, J. (2012). Risk management and financial institutions + website. Hoboken, New Jersey: John Wiley & Sons, Inc.
Kensinger, J. (2012). Research in finance. Bingley, U.K.: Emerald.
Ruozi, R. and Ferrari, P. (2012). Liquidity risk management in banks. Berlin: Springer