Impact of Treasury Single Account on the Liquidity

Abstract

The introduction of Treasury Single Account is as a result of numerous corrupt practices that exist in the Country's public accounting system, lack of transparency and accountability. The paper assesses the positive effect of implementation of TSA on the Economy, the public accounting system and the undesired consequences on the liquidity base and performance of banking sector in Nigeria. We administered questionnaires to the Management staff of the ten banks selected for the study. We employed Chi-square as a statistical tool for analysis of the data. The results obtained confirmed that the implementation of Treasury Single Account in the public accounting system impacted negatively on the liquidity base and the performance of banking sector in Nigeria. We, therefore 7 recommend that CBN and the Government should come up with an arrangement to address the issue of TSA considering the impact of the activities as the important 9 factor for efficient management, control of government's cash resources as well as sustainability of banks. CBN should go beyond the guidelines and put in place measures to correct any lapses or negative impact of the policy both in the banking sector and the economy at large. The implication of the study is that banks should avoid armchair activities and go to other source of funds in the economy. Many people that are denied access to credit facilities, investments and savings opportunity should be encouraged as this will improve the economy and result in sustainable banking sector in the country.

Effect of Treasury Single Accounts (Tsa) on the Performance of Ministries, Departments and Agencies (Mda) in Nigeria

“…A recent study by Kanu (2016) on the effect of TSA implementation on liquidity and performance of banks notes that by implementing TSA in Nigeria's public accounting system, the liquidity base of banks have suffered and the performance/activities of banking sector have plummeted. Also the study of Isaac (2015) had similar findings with Kanu (2016) that the adoption of TSA has no significant effect on Nigerian economy. This is contrary to the recent study of Yusuf (2016) on the effect of TSA on finance management in Nigeria's public sector.…”

“…Account (TSA) Kanu (2016) views TSA as one of the financial policies implemented by the federal government of Nigeria to integrate all revenues and treasuries from all ministries, departments and agencies and extra ministerial departments in the country where all the collections are paid into money depositing banks trailed to a single account at the apex bank of the nation (CBN). Thus, the introduction of TSA was expected to reduce the multiplicity of bank accounts previously maintained by various MDAs, thus, ensuring transparency and accountability in all organs of the government.…”

“…Also, ministries, departments and agencies and extra ministerial departments cash balance with the money deposit banks will have nil balance daily by remitting all the treasuries collected to the TSA. This as a result restricts money depositing banks from having access to multiple deposits resulting from multiple accounts (Kanu, 2016).…”

“…Jegede (2015) states in his study that majority of the MDAs and extra ministerial departments are against the TSA due to the fear of not having a control of monies they lodged in the bank account of their choices and that some agencies lodged the revenue they collected in fixed deposit accounts where huge interests are accrued. Kanu (2016) in his study on the effect of TSA implementation on liquidity and performance of banks note that the implementation of TSA in the public accounting system impacted negatively on the banks liquidity base and the performance of banking sector in Nigeria. Also the study of Isaac (2015) found similar finding with Kanu that the adoption of TSA has no significant effect on the Nigerian economy.…”

Treasury Single Account and the Performance of Banking Sector: A Study of Selected Deposit Money Banks in Oyo State, Nigeria

“…The results indicate that the implementation of Treasury Single Account deposit: federal government demand deposit (LnFGDD), Federal government time deposit (LnFGTD), and Federal Government savings deposit (LnFGSD) have positive impact on the bank performance in Nigeria. Kanu [20] also investigate the effect of implementation of treasury single account and economy, the public accounting system and the undesired consequences on the liquidity base and performance of banking sector in Nigeria. The findings reveal that the implementation of treasury single account in the public accounting system impacted negatively on the liquidity base and the performance of banking sector in Nigeria.…”