Internal Controls and Liquidity Levels in Selected Commercial Banks in Uganda

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TABLE OF CONTENTS

DECLARATION ............................................................................................................................. i

APPROVAL ................................................................................................................................... ii

DEDICATION ............................................................................................................................... iii

ACKNOWLEDGEMENTS ........................................................................................................... iv

TABLE OF CONTENTS ................................................................................................................ v

LIST OF ABBREVIATIONS ........................................................................................................ ix

LIST OF TABLES .......................................................................................................................... x

LIST OF FIGURES ....................................................................................................................... xi

ABSTRACT .................................................................................................................................. xii

CHAPTER ONE ........................................................................................................................... 1

INTRODUCTION ......................................................................................................................... l

1.1 Background to the Study ........................................................................................................... I

1.2 Statement of the problem .......................................................................................................... 2

1.3 Purpose of the study .................................................................................................................. 2

1.4 objectives of the study .............................................................................................................. 2

1.5 Research questions .................................................................................................................... 2

1.6 Scope of the study ..................................................................................................................... 3

1.7 Significance of the study ........................................................................................................... 3

1.8 The conceptual framework ....................................................................................................... 3

v

CHAPTER TWO .......................................................................................................................... 5

LITERATURE REVIEW ............................................................................................................ 5

2.0 Introduction ............................................................................................................................... 5

2.1 Internal Controls ....................................................................................................................... 5

2.2 Components of Internal Controls .............................................................................................. 8

2.2.1 Control Environment ............................................................................................................. 8

2.2.1.1 Corporate Culture ................................................................................................................ 9

2.2.1.2 Competence Levels ........................................................................................................... I 0

2.2.1.3 Quality of Audit Committees ............................................................................................ I 0

2.2.1.4 Management Integrity and Ethics ..................................................................................... II

2.2.2 Control Activities ................................................................................................................. II

2.2.3 Risk Assessment .................................................................................................................. 13

2.2.4 Information Flow ................................................................................................................. 14

2.2.5 Monitoring and Evaluation .................................................................................................. 16

2.2.5.1 Reconciliations .................................................................................................................. 16

2.2.5.2 Internal Checks and Audits ............................................................................................... 17

2.3 Accountability ......................................................................................................................... 18

2.3.1 Transparency ........................................................................................................................ 18

2.3.2 Disclosures ........................................................................................................................... 19

2.4 Liquidity Levels ...................................................................................................................... 19

2.4.1 Liquidity and borrowed funds .............................................................................................. 19

2.4.2 Liquidity Ratios ................................................................................................................... 20

2.4.3 Asset Liquidity Management ............................................................................................... 20

vi

2.5 Deposits with the Central Bank .............................................................................................. 2 I

2.5. I Commercial Deposit and Loan Exposure ............................................................................ 22

2.6 Managing Access to Funds ..................................................................................................... 22

CHAPTER THREE ............................................................ ~ ....................................................... 23

RESEARCH METHODOLOGY .............................................................................................. 23

3.0 Introduction ............................................................................................................................. 23

3. I Research Design ...................................................................................................................... 23

3.2 Population ............................................................................................................................... 23

3.3 Sample Size ............................................................................................................................. 23

3.4 Data Collection Instruments ................................................................................................... 24

3.5 Validity and Reliability of the Instrument .............................................................................. 24

3.6 Data ......................................................................................................................................... 24

3.7 Measuring the Variables ......................................................................................................... 24

3.8 Limitations .............................................................................................................................. 26

CHAPTER FOUR ....................................................................................................................... 27

DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS .......... 27

4.0 Introduction ............................................................................................................................. 27

4.1 Demographic characteristics ................................................................................................... 27

4.1.1 Gender .................................................................................................................................. 27

4.1.2 Age group of the Respondents ............................................................................................. 29

4.1.3 Number of years the respondent has worked in the bank .................................................... 30

vii

4.1.4 Education levels ................................................................................................................... 31

4.1.6 The respondents' relationship with his/her bank ................................................................. 33

4.2 Market share of commercial banks ......................................................................................... 34

4.2.1 Financial standing of local banks ......................................................................................... 35

CHAPTER FIVE ........................................................................................................................ 39

DISCUSSION/CONCLUSION OF RESULTS/FINDINGS ................................................... 39

5.0 Inti·oduction ........................................................................................................................... 39

5.1 Demographic characteristics of respondents .......................................................................... 39

5.2 Internal controls ...................................................................................................................... 40

5.2.1 Control environment ............................................................................................................ 40

5.3 Accountability ......................................................................................................................... 40

5.4 Monitoring .............................................................................................................................. 40

5.5 Relationship between internal controls and liquidity levels ................................................... 41

5. 6 Relationship between internal controls, monitoring and accountability ................................ 41

5.7 Conclusions of the findings .................................................................................................... 42

5.8 Recommendations ................................................................................................................... 43

REFERENCES ............................................................................................................................. 44

APPENDIX 1 ................................................................................................................................ 55

QUESTIONNAIRE ...................................................................................................................... 55

ABSTRACT This dissertation is about internal controls and liquidity levels. The objectives of the dissertation were to examine the relationship between internal controls and liquidity levels in commercial banks in Uganda, to examine the relationship between internal controls, monitoring and accountability in commercial banks in Uganda, and to ascertain whether internal controls, monitoring and accountability factors impact on liquidity levels in commercial banks in Uganda. The study concludes that there is a strong relationship between internal controls and liquidity levels and recommends Ugandan commercial to maintain and strengthen internal control in order to increase their liquidity levels that enhance better operations in the financial market, to improve their liquidity levels through increasing their current assets that can easily be converted into cash. This level of assets should be above the liabilities in order to meet the creditors' demands when there is need, to consider Inter-bank lending as a source of financing to boost their liquidity at short notice and control the rate of loaning forms, and furthermore, the study recommends that Ugandan commercial banks should consider transacting at a wide range of maturities. This allows borrowers to obtain the lowest rate of interest appropriate to their risk characteristics.

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APA

SAAKA, M (2022). Internal Controls and Liquidity Levels in Selected Commercial Banks in Uganda. Afribary. Retrieved from https://afribary.com/works/internal-controls-and-liquidity-levels-in-selected-commercial-banks-in-uganda

MLA 8th

SAAKA, MUSIIGE "Internal Controls and Liquidity Levels in Selected Commercial Banks in Uganda" Afribary. Afribary, 25 Jul. 2022, https://afribary.com/works/internal-controls-and-liquidity-levels-in-selected-commercial-banks-in-uganda. Accessed 08 Aug. 2022.

MLA7

SAAKA, MUSIIGE . "Internal Controls and Liquidity Levels in Selected Commercial Banks in Uganda". Afribary, Afribary, 25 Jul. 2022. Web. 08 Aug. 2022. < https://afribary.com/works/internal-controls-and-liquidity-levels-in-selected-commercial-banks-in-uganda >.

Chicago

SAAKA, MUSIIGE . "Internal Controls and Liquidity Levels in Selected Commercial Banks in Uganda" Afribary (2022). Accessed August 08, 2022. https://afribary.com/works/internal-controls-and-liquidity-levels-in-selected-commercial-banks-in-uganda