A study of the effect of the treasury single account on commercial banks deposits and lending in Zambia.
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Date
2024
Authors
Mulenga, Felix
Journal Title
Journal ISSN
Volume Title
Publisher
The University of Zambia
Abstract
The implementation of the Treasury Single Account (TSA) in Zambia brought about drastic changes in the management of public funds. The Bank of Zambia assumed custodianship of public funds while Commercial Banks remain revenue collection agents throughout the country. This study investigated the effect of the TSA on Commercial Banks Deposit Mobilization and Lending in Zambia. Secondary and Time series data were collected from the Bank of Zambia (BOZ) annual reports covering the pre- and post-TSA implementation eras, over a ten-year period (2010-2019). The independent variable was represented by Government Deposits (representing the TSA), while aggregate Commercial Banks Deposits and Loans and Advances were the dependent variables. The data were analysed using descriptive, regression and correlation analysis, with the aid of IBM SPSS Statistics version 28. The findings of the study revealed that Government Deposits have a significant positive effect on Commercial Banks Deposit Mobilization. The P-value was found to be <0.001 which is less than 0.05 meaning that the P-value is statistically significant at 5% level. The study also revealed that Government Deposits have significant positive effect on Commercial Banks Loans and Advances. The P- value was found to be <0.001 which is less than 0.05 meaning the P-value is statistically significant at 5% level. The trend analysis of Government Deposits further revealed a slow growth in Government Deposits after TSA implementation. Between 2010 and 2014 which is the pre-TSA era, Government Deposits in Commercial Banks grew by 163%, whilst between 2015 and 2019, which is the post -TSA era; Government Deposits grew by 74%. The trend analysis of Loans and Advances revealed a slower growth in Loans and Advances during the post -TSA era (35%), compared to 136% growth during the pre -TSA era. The study therefore concluded that the TSA which aims to withdraw Government Deposits from Commercial Banks has a negative effect on Commercial Bank Deposits and their lending ability. The study recommended that banks should develop strategies to attract private sector deposits, to fill the void created by the implementation of the TSA. Banks should come up with innovative solutions to tap into the unbanked population. It is important that banks develop attractive savings products to encourage the culture of saving among citizens. The study further recommended that the Ministry of Finance should consider allowing Commercial Banks involved in revenue collection, a few days float before revenue is remitted to the main TSA account at Bank of Zambia (BOZ).
Description
Thesis of Master of Business Administration in Management Strategy