THE IMPACT OF E-DIVIDEND PAYMENT ON BANKING INDUSTRY ...
Transcript of THE IMPACT OF E-DIVIDEND PAYMENT ON BANKING INDUSTRY ...
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THE IMPACT OF E-DIVIDEND PAYMENT ON
BANKING INDUSTRY EQUITY HOLDERS: A STUDY OF FIN BANK PLC AND UBA PLC
BY
NWORIE, UCHECHUKWU MERCY
PG/MBA/07/46704
DEPARTMENT OF BANKING AND FINANCE FACULTY OF BUSINESS ADMINISTRATION UNIVERSITY OF NIGERIA ENUGU CAMPUS
JUNE, 2012.
TITLE PAGE
THE IMPACT OF E-DIVIDEND PAYMENT ON BANKING INDUSTRY EQUITY HOLDERS
(A STUDY OF FIN BANK PLC AND UBA PLC).
BY
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NWORIE UCHECHUKWU MERCY
PG/MBA/07/46704
A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE
AWARD OF MASTERS IN BUSINESS ADMINISTRATION DEGREE IN BANKING AND
FINANCE
DEPARTMENT OF BANKING AND FINANCE FACULTY OF BUSINESS ADMINISTRATION UNIVERSITY OF NIGERIA ENUGU CAMPUS
JUNE, 2012.
APPROVAL PAGE
It is certified that this project work was done by Nworie,
Uchechukwu Mercy with the registration number
(2007/2008/46704) in the Department of Banking and Finance
under the supervision of Dr. J. U. J. Onwumere in the partial
fulfilment of the requirements for the award of degree of Master
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of Business Administration in Banking and Finance (MBA), of
the University of Nigeria.
----------------------- ----------------------- Dr. J. U. J. Onwumere Dr. J. U. J. Onwumere (Supervisor) (Head of Department) --------------------------- ---------------------------- Date Date
DEDICATION
This work is dedicated to God Almighty, the reason for my
living. He is the one who made this work possible. To him be all
the Glory now and forever, Amen.
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ACKNOWLEDGEMENTS
I wish to express my special thanks to my supervisor, Dr. J.U.J.
Onwumere for his encouragement, guidance and supervision at
every state of this work.
My special thanks also go to my lecturers in the department of
management science who impacted knowledge to me
throughout my stay in school. I respect and admire Dr. Mrs
Modeme who from the grass root direct and encouraged me.
Moreover, my thanks go to my course mates in the department
of Banking and Finance. Also I will like to say big thank to my
parents Mr. and Mrs. A. Nworie and my siblings, for their
immeasurable support throughout my stay in school.
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ABSTRACT
The purpose of this study is to determine the effect of e-dividend payment on banking industry equity holders in Enugu state (a study of Fin Bank Plc and UBA Plc). Data were collected from both primary and secondary sources. The major data collection instrument is the questionnaire. The data were presented in tables as frequency distribution. In the analysis, the techniques of percentage and frequency were used. In testing the hypothesis, the Z test was applied. The following are the major finding of the study: (I) that e-dividend payment in the bank has helped in speeding up services to equity holders in the banking industry. From the findings it is clear that computer in Nigeria banks has enhanced prompt calculation and payment of e-dividend to equity holders. (II) That e-dividend payment in Nigeria banks has generally reduced the stress and problems encountered by equity holders in Nigeria banking industry. (III) From the findings it is clear that Government should provide necessary infrastructural facilities (e.g. electricity supply situation should be improved) necessary for the support of the industry and ensure healthy competition in the banking system. The researcher recommended Improvement in service delivery by the telecommunication industry in the country from its current epileptic condition. (IV) Internal Business Environment should be made favourable to the adoption and payment of e-dividend system, that is, the top management should be supportive and receptive to new idea: business facilities should be able to support the innovation or bank should update and equip them with necessary trainings and facilities to enable them handle the challenge.
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TABLE OF CONTENTS
Cover Page - - - - - - - - i
Title Page - - - - - - - - ii
Approval Page - - - - - - - - iii
Dedication - - - - - - - - iv
Acknowledgements - - - - - - - v
Abstract - - - - - - - - - vi
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study - - - - - 1
1.2 Statement of the Study - - - - - 5
1.3 Objectives of the Study- - - - - - 6
1.4 Research Questions - - - - - - 7
1.5 Hypotheses of the Study- - - - - - 7
1.6 Scope of the Study - - - - - - 8
1.7 Significance of the Study - - - - - 9
1.8 Operational Definition of terms - - - - 10
References - - - - - - - 12
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CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework - - - - - 10
2.2 Reasons for not Paying Dividends as at when due - 13
2.3 Problems of Unclaimed Dividend in Banking Industry
and Capital market - - - - - - 19
2.4 Reasons for Unclaimed Dividend - - - - 23
2.5 The Possibility of e-dividend Mechanism in the
Nigerian Economy - - - - - - 21
2.6 Positive Impact of e-dividend Payment - - - 27
2.7 Prospect of Introducing E-Dividend Payment to
Equity Shareholders - - - - - - 30
2.8 The Challenges Facing E-Dividend Payment - - 32
2.9 Other Issue on E-dividend in Banking Industry
and in Nigeria Capital Market - - - - 34
References - - - - - - - 39
CHAPTER THREE: RESEARCH MEDTHODLOGY
3.1 Research Design - - - - - - 40
3.2 Source of Data - - - - - - - 41
3.3 Population of the Study - - - - - 42
3.4 Sample Size and Sampling Technique - - - 42
3.5 Method of Data Collection - - - - - 43
3.6 Method of Data Presentation and Analysis - - 44
3.7 Validity of the Instrument - - - - 46
References - - - - - - - 48
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CHAPTER FOUR: ANALYSIS
4.1 Presentation and Interpretation of Data - - - 49
4.2 Test of Hypotheses - - - - - - 54
4.3 Implications of Result - - - - - - 65
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS 5.1 Summary of Findings - - - - - - 67
5.2 Conclusion - - - - - - - - 69
5.3 Recommendation - - - - - - 70
Questionnaire- - - - - - - - 73
Bibliography - - - - - - - 76
Appendix 1 - - - - - - - 78
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CHAPTER ONE INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The electronic method of payment or e-payment (e-
commerce) has taken a centre stage in economic activities of
countries of the world. In its bid to catch up with this trend in the
world, Nigeria has adopted e-commerce.
Investment in recent time, in the Nigeria capital market
and in the banking industry appears to be taking its shape,
especially when considered along the new lease of life. The
Securities and Exchange Commission (SEC) seems to be
injecting into the operation of the market and even the
recapitalization exercise that was carried out in the banking
industry.
The market before now was regarded as a place where only the
elites in the society call the shot, but it is now being used as a
variable factor in measuring the growth and development of
nation around the globe. (www.business.com 2008)
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Operation I the Nigerian Capital market have witnessed a
lot of transformation, both in human and infrastructural
development. The Nigerian Stock Exchange (NSE) being a self
regulatory organization, in a space of time has eroded the elite
cliché associated with the market and made it all corners
affairs. Notwithstanding the Nigeria Stock Exchange goals and
objectives of ensuring that every Nigerian has bile of the
goodies in terms of returns on investment that flow from having
a stake in the market, some structured guidelines in the affairs
of the market as it relates to investors appears as if the
investors were being done a favour for approaching the market
for investment. With the recent security exchange
commission directives that all registrars of Companies in the
country should no longer hold brief for their parent company or
any organization, they have close affinity with and coupled with
the E-dividend option recently launched, investor‟s prayer of a
virile and transparent market operations may have finally come
to be. (Best stock news. www.wordpress.com). It will be
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recalling that as at September 2007, though with the alleged
connivance of registrars, a sum of N19billion unclaimed
dividend was still variously being held in the coffers of both
quoted and unquoted companies and that the money was being
ploughed back into the owner‟s account as profit.
(www.business.com 2007), attempts has been made in
the pat by SEC to float a trust fund to help manage the huge
unclaimed dividend but this was vehemently oppoed by the
investors in the market.
The Security and Exchange Commission‟s decision to launch
the e-dividend at this time in the history of the country is a move
towards attaining its vision of being among the 20 most
developed economics in the world by 2020 and it serves a
positive tonic to both local and international investors to now
have a rethink on the workability of corporate governance policy
in the country. (See e-dividend – option news of 17/03/2005).
E-dividend as an option is a means where by an
investor‟s account is credited electronically whenever a
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transaction is carried out for him/her in the market. E-payment
system is applicable to the banking industry which means
paying directly into the account of the beneficiary. Other
advantages as it is obtained in other jurisdiction where e-
dividend option and e-payment system have been adopted are
that it will enhance the capital market liquidity; shareholders will
have their money to reinvest on time; payment is being affected
immediately; it reduces delay; enhances good cooperate
governance; eradicates the era of quoted companies declaring
dividend when in the actual fact they do not have cash on
ground to pay.
According to the ministry of finance, on his open speech
says „with the introduction of the e-dividend, the commission
has further shown serious commitment in removing some
constraints in dividend payment in the areas of eliminating
unclaimed dividend. Warrants delay in depositing dividend
warrants into current or saving account, dividend warrants lost
due to change of address, incomplete address, poor and
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inefficient dispatch procedures and delay in receipt of dividend
warrants.
1.2 STATEMENT OF THE PROBLEM
Dividend which is the main stay of the Nigerian investors
on investment, prior to the discovery of Nigeria Stock Exchange
has been in jeopardy (www.business.com 2007).
Despite the concerted efforts by successive Nigerian
government that is Nigeria Stock Exchange (NSE) and Security
and Exchange Commission (SEC), the situation has not
changed much. Dividend continues to contribute les than what
it is expected of it in lifting dividend policies from its deplorable
is yet to yield the desired results.
Below are some of the problems that justify the researcher in
embarking on the impact of e-dividend payment to equity
holders of the Nigeria banking industry
The issue of unclaimed dividend is ramped.
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The issue of unclaimed dividend is also the main stay
back on investors.
An average Nigeria investor has small holding and
various needs and problems
There is also the issue of clearance on the declaration
of the said dividend.
Operations of the Nigeria Stock Exchange are confined
to well known locations, persons, companies and
therefore do not extend to wide geographical areas, all
these have resulted in problems to this sector
1.3 OBJECTIVES OF THE STUDY
The study seeks to achieve the following set objectives.
1) To evaluate the impact of E-dividend payment system to
investors or equity holders.
2) To identify constraints that militates against efficient and
effective declaration of dividend
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3) To suggest possible ways of enhancing the effective and
efficient ways of enforcing good dividend policies.
1.4 RESEARCH QUESTIONS
The study seeks to answer the following questions.
1) What are the expected impacts of electronic dividend
payment to equity holders?
2) What are the problems associated with e-dividend
payment?
3) What is the importance of electronic dividend payment to
equity holders in banking industry?
1.5 SCOPE OF THE STUDY
This study is geared towards evaluating the impact of e-
dividend payment to equity holders of Nigeria banking industry;
it is also within the scope of the study to investigate the roles of
NSE and Sec in the development of e-dividend payment. It will
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also examine the policies on the e-dividend and also view
whether it meets the prescribed minimum or not.
1.6 HYPOTHESES OF THE STUDY
(I) The impact of E-dividend to the equity holder is not
encouraging.
(II) E-dividend payment does not reduce the issue of
unclaimed dividends.
(III) E-dividend payment does not enhance the
effectiveness and efficiency of dividend payment to
equity shareholders.
1.7 SIGNIFICANCE OF THE STUDY
Research as the process of arriving at dependable
solution to problems through the planned and systematic
collection, analysis and interpretation of data, this would enable
the researcher to fish out the unknown as regards to the issue
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of the impact of e-dividend payment to equity holders of Nigeria
banking industry, and in so doing more would be known about
this particular issue.
It also serves as a source of information especially to
research students who may wish to undergo more research on
the said topic. Through this study, the researcher would be able
to arrive at dependable solution and conclusion to this problem
and make recommendation of meaningful contribution towards
the equity holders, Nigeria Stock Exchange (NSE), Security and
Exchange Commission (SEC), Banks and even to the general
public.
1.8 OPERATIONAL DEFINITION OF TERMS
Bank: - Banks are financial institutions responsible for mobbing
out excess fund
and giving it out to customers
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Capital Market: - This is a market that deals on long-term
financing.
Equity Holders: - These are the owners of a company‟s shares
or properties.
E-Dividend: - This is a means where an investor‟s account is
credited electronically whenever a transaction is carried
out for him/her in the market
Unclaimed Dividend: - This is part of the dividend that has not
been declared or claimed
Registrar: - This is a person who provides the an enabling
electronics platform to ensure that all shareholders are
able to update their bank account detail from time to time.
NSE (Nigerian Stock Exchange): - This is the Nigerian trading
floor for stock.
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SEC (Security and Exchange Commission): - This is the
body that regulates the activities of the market and ensure fair
dealing in securities and protection of investors.
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REFERENCES
ONWUMERE J. U. J. (2005), Business & Economic Research Method Don Vinton Ltd, Ikorodu Road, Lagos http://www.smartinvestorafrica.com, E-dividend Answer to Unclaimed dividend
http://www.offshore-servicesbiz/corporatetraining-tools-templates from wikipedia the free encyclopedia
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CHAPTER TWO REVIEW OF RELATED LITERATURE
2.1 CONCEPTUAL FRAMEWORK
A dividend is the distribution of profits to a company‟s
shareholders.
The primary purpose of any business is to create profit for
its owners and the dividend is the most important way the
business fulfills this mission. When a company earns a profit
some of this money is typically reinvested in the business and
called retained earnings, and some of it can be paid to its
shareholders as a dividend, paying dividend reduces the
amount of cash available to the business, but the distribution of
profit to the owners is after all, the purpose of the business.
Some companies pay “stock dividends” rather than cash
dividends, n which case shareholders receive additional stock
share.
The amount of the dividend is determined by every year at the
company‟s annual general meeting and declared as either a
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cash amount or a percentage of the company‟s profit. The
dividend is the same for all share of a given class that is
preferred shares or common stock shares, once declared a
dividend becomes a liability of the firm.
When a share is sold shortly before the dividend is to be
paid, the seller rather than the buyer is entitled to the dividend.
At the point at which the buyer is not entitled to the dividend if
the share is sold, the share is said to go ex-dividend. This is
usually two business day before the dividend is said to be paid,
pending on the rules of the stock exchange, when a share goes
ex-dividend, the price will generally fall by the amount of the
dividend.
The dividend is calculated mainly on the basis of the
company‟s un-appropriated profit and its business prospects for
the coming year. It is then proposed by the Executive Board
and the Supervisory Board to the annual general meeting. At
most companies, however, the amount of the dividend remains
the constant. This helps to reassure investors, especially during
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phases when earnings are low and sends the message that
the company is optimistic with respect to its future performance.
Some companies have dividend reinvestment plan, these
plans allow shareholders to use dividends to systematically buy
small amounts of stock often at no commission. Dividend is not
yet paid in gold certificates, although this idea has been
discussed by mining companies such as Goldcorp.
2.2 REASONS FOR NOT PAYING DIVIDEND AS AT WHEN DUE
Company Management and the board believe that it is
important for the company to take advantage of opportunities
before it, and reinvest its recent profits in order to grow, which
will ultimately benefit investors more than a dividend payout at
present.
When a dividend are paid, shareholders in many
countries, including the United States suffer from double
taxation of those dividends, the company pays income tax to
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the government when it earns any income and then when the
dividend is paid, the dividend is paid, the individual shareholder
pays income tax to the government on the dividend payment.
This is often used as justification for retaining earning or for
performing a stock buyback, in which the company buys back
stock, thereby increasing the value of the stock left outstanding.
The shareholders pay no income tax on this transaction.
The Security and Exchange Commission (SEC), the apex
regulatory body of the Nigerian Capital Market, introduced
electronic-dividend payment system which will enable
shareholders get paid within 24 hours of dividend payment as a
way of improving efficiency and enhancing investor‟s
confidence.
We believe the e-dividend payment system which is
already catching up will minimize cases of unclaimed dividend,
eliminate dividend loss in transit and enhance the ability of the
shareholder to immediate access and utilize proceeds of their
investment. The director general of the Security and Exchange
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Commission (SEC) Musa Alifaki said at the launching
ceremony. The Director General spoke through the director
Security and Investment Service department of the commission
Deisy Ekimeh, SEC had earlier this year disclosed there existed
about 14billion Naira of unclaimed dividends.
E-dividend is the payment of dividends due to
shareholders through a direct credit into a nominated bank
account rather than issuance of cheque or dividend warrant.
Some of the draw back of the old dividend payment
according to capital market operators included poor logistic
management, inadequate update of shareholders personal
data, inability of investors to maintain regular signature to
collect dividends and multiple applications during public
offering.
Financial expert at the occasion said the e-dividend
payment will eliminate existing shortcomings as it is convenient
and secure on-line means of payment of dividends.
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The new system equally has its own challenges of
reaching out to a large number of people who do not fall in the
elite bracket. To care of those in this category, the Exchange
said it would embark on translating the e-dividend information
into three main Nigerian languages.
It is the best and cheapest way of paying shareholders,
what is just for shareholders to submit their bank account
information details and dividend will be paid into it.
Paul Lawal, Managing Director Nigerian inter-bank
settlement system explained that the organization had started
setting dividend through the e- dividend system, starting with
the shareholders of Oando Nigeria Plc and Nigeria Breweries
Plc, stressing that more companies will also follow. In order to
ensure the success of the new system the commission has
issued letters to respective shareholders to meet their
implementation modalities. Issuers are to meet payment
obligation immediately after declaring of dividends at the annual
general meeting. This will help e- dividend to lift the face of
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business and in Lagos, shareholders whose account will now
be credited 24hour after declaration of dividend will now be able
to utilize their dividends whenever they wish.
2.3 PROBLEMS OF UNCLAIMED DIVIDEND IN BANKING INDUSTRY AND CAPITAL MARKET
Unclaimed dividends means all outstanding monies
remaining on individual account six months after the payment
date of the latest declared dividend (Company and Allied Matter
Act of 1990)
The issue of unclaimed or unremitted dividends is soon to
be over with the launch, in the week of e- dividend by the
Securities and Exchange Commission. Dividend payment had
been a major headache for both companies registrars and the
investing public companies complain of not getting adequate
information from investors to facilitate dividend payment,
information such as proper postal address for individual warrant
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postage, lack of an identifiable next of kin when the investor I
no more and others.
But investors/ companies sometimes take advantage of them
when they lack liquidity to pay dividends.
A lot of problems are associated with unclaimed dividend and
they include: -
1) Large amount of unclaimed dividend is a bad omen to
foreign investors, since one of the factors to be
considered by foreign investors before deciding on
whether or not to invest in a country is the ability to
recover dividend.
2) The continued retention of dividend by companies
distorts the true financial picture of the companies
thereby misleading investors, government and the
members of the general public.
3) Non-payment of dividends discourages investments in
the stock market and encourages investors to look out for
alternative investment such as real estate and money
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market. The effect out this is that companies often derive
their source of fund for investment.
4) The continuous existence of the unclaimed dividend
phenomenon encourages companies to exploit the
inadequacies of CAMA by declaring dividends only to
pay out a small portion mainly to institutional investors
(mostly on the majority) to their fate. Whereas, CAMA
does not allow declaration of dividend where a
company‟s profit does not translate its liquid cash, some
companies resort to borrowing to pay off their dividend to
their investors.
5) Renewal of payee signature as a requirement for lodging
dividend warrant into bank account.
6) The long-term measures was the proposal unclaimed
dividend trust fund which has just failed to sail through
the national assembly. The proposal has fix the
promulgation of a law, which mandated companies to
pool unclaimed dividend after (15) fifteen months into the
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dedicated account to be managed by the proposed
stakeholders themselves.
All that, hopefully would be in the past with the
introduction of e-dividends or electronic dividend payment
where dividend are paid directly into the investor‟s bank
account. Among other things the new system is meant to
eradicate incidences of warrant loss or theft, delay in payment
and unclaimed warrants.
Director General, Security and Exchange Commission
(SEC), Musa Al-Faki said e-dividend would reduce the
incidences of unclaimed dividends and enhance the ability of
the shareholders or their heirs to immediately access and utilize
the proceeds of their investment. This innovation will be
beneficial to investors, the companies and the Nigerian
economy as a whole.
Echeng Al-Faki, minister of state for finance, Remi
Babalola, said e-payment is pivotal to the development,
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strengthening and deepening of the country‟s capital market,
making it more competitive for local and foreign investors.
For its success, it is essential that investors have functional ban
accounts, with the account information submitted to the
respective registrars to facilitate their dividend payments.
This is one giant step forward for the market and the economy
and it is incumbent on investors, especially to make it work.
2.4 REASONS FOR UNCLAIMED DIVIDEND
The issue of unclaimed dividend is dealt with in section
382 of the Company and Allied Matter Act 1990 and it states
“where dividends are returned to the company unclaimed, the
company shall send a lot of the names of the person entitled
with the notice of the next annual general meeting to the
member” it states further that after the expiration of three
months mentioned in sub-section (1) of this section, the
company may invest the unclaimed dividend for its own benefit
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in an investment outside the company and no interest shall
accrue the dividend against the company.
The following are reasons for unclaimed dividend in the
banking industry and Nigeria stock exchange.
Lack of awareness by some investors in the intricacies
of stock market operation.
Multiple applications by some shareholders, especially
during indigenization exercise of the federal
government. At this time there were evidences that
investors made multiple application and were unable to
reproduce the various signature when it was time to
collect dividends.
Inefficiency of some registrar in the capital market.
Death without a will or (in estate) and lack of next of kin.
Change of address without prior notification to the
registrar.
Wrong or incomplete addresses of the shareholder(s)
kept by registrar.
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Inefficiency of the postal system in Nigeria
The distance between the company and the
shareholders also contributed most problem of these
unclaimed dividend issue.
Poor information communication network
2.5 THE POSSIBILITY OF E-DIVIDEND MECHANISM IN THE NIGERIAN ECONOMY
E-dividend payment started its operation fully in Nigeria
on the 28 of February 2008. it is a joint arrangement between
the Securities and Exchange Commission (SEC), the Central
Bank of Nigeria (CBN), the Central Securities Clearing System
(CSCS)etc
The shareholders would henceforth have to supply their
stock brokers with information regarding the bank account in
which they wish to receive and pay individual or make such
information available to the relevant companies registrars
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where shareholders does not have a stock broking from
managed securities account.
Akifki: (2008) advised the registrars to insist on full cash
banking from company for all dividends declared before they
are posted into shareholders account.
The era of piecemeal according to loan is over as he advised
shareholders to immediately report cases of late payment of
dividends into their banks account to Security and Exchange
Commission (SEC).
The ministry of finance has also ask SEC to publish the
list of registrars for each publicly quoted company to enable the
investing public commence the process of updating their
records and that shareholders as well as issuing house must
ensure that all subscription and all bank account information
are closely monitored by the commission.
To show that it will work out in Nigeria Capital Market, the
ministry of finance has advised all corporate institution to make
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E-dividend payment a corporate public to instill confidence and
enhance accountability and transparency in the system.
2.6 POSITIVE IMPACT OF E-DIVIDEND PAYMENT
The minister for finance Mr. Remi Babalola who et the ball
rolling at the inauguration of the electronic dividend in Abuja,
recently said that e-dividend platform, would bring about the
transparency required in the payment of dividends in the
operation of the market.
He emphasized that payment of dividend is an important
element in the growth of an economy. This launch is therefore
expected to make an era of drastic dividend in Nigeria, which
stood at N19billion as at the end of 2007. This confidence
booster is paramount for the development, strengthening and
depending of the Nigeria Capital Market, making it more
competitive for both domestic and foreign investors. It is
important that we all continue to work harmoniously to achieve
this task.
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Laying credence to the e-dividend as an option, the
director general of SEC Mr. Musa Al-Faki said that in the past,
various measures were proposed towards reduction or total
elimination of the increasing incidence of unclaimed dividend
menace, but all these measures failed. At a time, there was a
mandatory publication of all the list of investors whose
dividends has remained unclaimed in the annual report of the
quoted companies as well as bill recommending the setting up
of an unclaimed dividends trust fund (UDTF).
The UDTF was expected to administer unclaimed dividend by
going extra mile to look for the owners.
Al-faki, also mentioned that evidence abounds on how
some companies use this unclaimed dividend to manipulate
their result adding that these prompted the commission to set
up UDTF, but that unfortunately, the bill for the setting up of the
fund was rejected by the national assembly. “it is in the light of
this back ground among others that SEC finds it difficult in
introducing e-dividend”.
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Babalola said that, with the introduction of e-dividend, the
commission has further shown some serious commitment in the
removal of constraints in dividend payment, such areas
includes the elimination of unclaimed warrants, delay in
depositing dividend warrants into current or savings accounts,
dividend warrant lost due to changing of address, incomplete
address, poor and inefficient dispatch procedures and the delay
encountered in the receipt of dividend warrants.
The Chairman, Senate Committee on Capital Market,
Senator Ganiyu Solomon described the e-dividend option as an
innovation by SEC o arrive at eradicating the long wait in
accessing share dividend by investors. He said the investors
marinade would further be boosted considering the fact that
with e- dividend, shareholders can access their dividend in the
market out of which they can plough back whenever the case
arises.
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To make this option work effectively, shareholders must
all have bank account and update same with their respective
registrars.
Babalola explained that the registrars must provide an enabling
electronic platform to ensure that all shareholders are able to
update their bank account details from time to time.
2.7 PROSPECT OF INTRODUCNG E-DIVIDEND PAYMENT TO EQUITY SHAREHOLDERS
Electronic dividend, which is IT driven is newly introduced
as a method of dividend payment which started working fully in
Nigeria banking industry on 28th February 2008. The prospects
of the introduction are as follows: -
I. It will enhance the development of the Nigeria banking
industry and capital market, E- dividend will help the
growth and development of capital market through
ensuring a good standard of dividend payment.
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II. It enhances fast payment of E- dividend; E- dividend
encourages fast payment of dividends to shareholder
which also help the economic development of Nigeria.
III. It enhances globalization, E- dividend and Nigeria capital
Market to grow globally through it‟s electronically method
of payment.
IV. It helps to build reputation of Nigeria capital market and
create more confidence for further economic activities I
the banking industry.
V. It brings innovation in the Nigerian banking industry and
capital market; since E- dividend is newly established
arrangement in the banking industry, these would bring
changes which will improve the standard of the
shareholders.
VI. E-dividend payment will help in the protection of fraud in
the Nigeria capital market and in banking industry, the
payment is made to the appropriate owners hence there
is no more diversion of fund.
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VII. The introduction of e- dividend payment to the Nigeria
capital market and banking industry will also help to
ensure efficiency in the industry.
VIII. It will boost the confidence of the investors through the
information and technology involved, the investors have
the confidence that they cannot be cheated in their
business and financial commitment.
2.8 THE CHALLENGES FACING E-DIVIDEND PAYMENT
A lot of challenges are facing the operation of E-dividend
payment in Nigeria, some of these challenges include: -
I. Fraud: - This is a situation where an individual use any
fraudulent means or device to obtain benefits, fraud may
occur during the process of trying to manipulate the
electronics used in the payment of dividend. But it is
properly monitored, it can eliminate fraud.
II. Poor Management: - Another challenge facing E-dividend
payment is poor management, if the management of the
41
e- dividend payment is such that are inexperienced, it
would affect the development of the e- dividend payment.
III. Challenge in Government: - This is another challenges
facing e- dividend payment in the banking industry and in
the capital market, because hence there is a change in
government, the new government may not buy the idea of
e- dividend payment and this might hinder the
development of e-dividend payment in the industry.
IV. Security of the E-Dividend Payment- If there is no security
in the e-dividend payment; these would affect the
efficiency and effectiveness of its operation. It should also
be prevented from all sources of manipulation and fraud.
V. System supervision: - this is another challenge facing e-
dividend payment option, because the system used in
paying should be checked at all times, and it must also be
monitored, if not so it would cause disaster in the banking
industry, but if properly supervised it will enhance
transparency and accountability.
42
2.9 OTHER ISSUE ON E-DIVIDEND IN BANKING INDUSTRY AND IN NIGERIA CAPITAL MARKET
The Nigeria Inter-Bank Settlement System (NBSS) which
facilitates the processing of the dividend payment has assured
that everything had been put in place to ensure a smooth and
efficient payment system.
The managing director of NBSS Plc Mr. Paul Lawal said
that following the company‟s appreciation of the importance of
e- dividend payment, that it has help to secure the hardware,
software and telecommunication infrastructure to ensure safe
and efficient electronic payment of dividend in Nigeria.
Lawal added that “NBSS, the bankers committee payment
company has been involved in safe and secure electronic inter-
bank payment since 1994. The installed security on NBSS as
well as additional initiatives agreed by stakeholders as
approved by SEC will eliminate all case of fraud and diversion
in the administration of dividend in Nigeria”.
43
However, shareholders of various groups who were also
present at the launching made their contribution. Sir Sonny
Nwosu, National coordinator of the Independent Shareholders
Association of Nigeria (ISAN) commended SEC and urged the
commission to create awareness for shareholders to go and
claim their dividend and also go extra mile in publishing the list
of registrars attached to the company where to go.
Dr. Farouk Umar, another shareholder was of the opinion
that the returned money as a result of over subscription of initial
public offer should be returned to investors through this means.
Explaining further he said that these means would hasten the
process of returning the money to shareholders and allow them
make use of their money on time instead of being tied down
unnecessarily. On the dividend trust fund bill, he said that the
need for it has been over ridden by the invention of e-dividend.
“There I no need for this again to be represented as it will only
mean that there will still be unclaimed dividend”.
44
He also urged registrars to restructure, on how to
accommodate the new member of investors compared to what
they had then, when there was no much awareness.
Also, on the uniqueness of the e-dividend which involves
investors having either saving or current account, he said that
95% of those in the northern part of the country do not have
bank account and greater percentage of them can neither read
nor write. This is also part of the reason SEC should make it
mandatory for anyone that wants to invest in shares to first of
all open a bank account.
Timothy Adesiyan, on the other hand who represented
another group formally led by Akintunde Asalu said that NSE
should not wait for December 31, 2008 deadline dematerializing
certificates but rather to allow investors post it to the CSCS,
citing an instance why this move should be considered, he said
that during share reconstruction of some companies on the
Nigeria stock Exchange they never asked them to submit their
certificates and yet the reconstruction was done effectively.
45
Commenting on this development, a cross section of
stock brokers who spoke who spoke with Nigerian Tribune on
the matter commended SEC for their noble option and said it
would reduce incidence of unclaimed dividend if actually the
policy is implemented, they said the only area they are worried
about is the area of awareness.
The stoke brokers also emphasized the need, that the
commission should create awareness for the people, that these
would make the system work better and at least put an end to
the issue of stale dividend and pains of revalidating of dividend
warrants.
While giving codes to the SEC initiative Mr. George
Okafor, Managing Director of Ideal Security Limited said that if
the options adopted that it would better because it allows the
dividends to go straight into ones account even as it allows for
easy cash flow management. He also said that everybody is
interested in reducing man hour, noting that anything that would
make people to save time is a welcome development and we
46
are all working forward to a day where most things will be
electronically done.
For the managing director of PIPC Securities, Mr.
Audytacus, said that there is no way you would want to embark
on e-dividend option without individual investors having
accounts, adding that we are not going to wait for people who
are laying back. “We should all be looking forward to growth
and development. Everybody should embrace modernism; we
need to migrate from issues that tend to hold we down and a lot
of these things of course are challenges but we cannot afford to
be held down by people who are still lacking behind, all things
being equal if you re going to participate in the banking industry
you must embrace the element of modernism.
47
REFERENCES
Okafor O. F (1990), Investment Analysis and Management New York MC-Grand.
Ugwuanyi W. N (2002), The Nigerian Financial System Agada Lagos (2nd Edition).
Ogunleye G. A. (2002), The Regulatory Imperative of Implementing the Universal Banking in Nigeria
NDIC Quarterly Vol II No 172
Ezra S. (1997), An Introduction to Financial Management California, Good Year Publication Company.
Soludo C. C. (2004), Consolidating the Nigeria Financial Industry to Meet the Development of the 21st Century, (An Address to the Special Meeting of Bankers Committee Held on July 6th 2004).
CBN Headquarter Abuja
http://www.nigeriabusinessinfo.com; The Nigeria Stock Exchange, Security and Exchange Commission.
http://www.nigeriabusinessinfo.com; The Nigeria Stock Exchange – Profit of 10 Reputable Stock Broking Firms in Nigerian Economy.
48
CHAPTER THREE RESEARCH METHODOLOGY
3.1 RESEARCH DESIGN
A good project design is a sin-qua-non to any attempt
towards a project study on the impact of e-dividend payment on
banking industry equity holders.
Due to the nature of this research topic, the researcher
adopted a historical research method. A historical research
method, according to Orji (1996) deals with the determination,
evaluation and explanation of past events essentially for the
purpose of gaining a better and clear understanding of the
present and making more reliable prediction of the future.
The researcher will use primary and secondary data to
analyse the impact of e-dividend payment on banking industry
equity holders, because of the nature of this project work, Likert
Scaling Statistical Model will be use in the analysis of the
questionnaires and in testing of the hypothesis, Z test
statistical model will be used.
49
3.2 SOURCE OF DATA
The data for this research work will be sourced from area
or places in which fact can be drawn. The data for this work
were collected from FinBank Nig. Plc and United Bank for
Africa Plc. Though the sources are grouped into two; primary
and secondary sources.
Primary Source; The primary data were collected through oral
interviews and questionnaires distributed to the above banks
and parastatals. This primary source covers both the question
and the hypothesis.
Secondary Source; Though the result of any research is highly
dependent on its primary sources which has been gathered
from the structured interview, but the secondary sources is also
require to understand the concept definition, theories and
empirical result. We have used several books, research
literature, articles, journals and thesis as secondary sources for
our study, internet source were also used as a secondary
sources for the research work.
50
3.3 POPULATION OF THE STUDY
Population is the set of all units under study. For this
research work, the population is drawn from two banks such as
FinBank Plc and United Bank for Africa Plc, in all, the
population of the study is two thousand one hundred (2100).
The population of staff for the purpose of this research
work is mostly senior staff that has knowledge or an idea on
how the banks deals with equity, also departmental heads were
selected because of their experience and knowledge about the
subject matter.
3.4 SAMPLE SIZE AND SAMPLING TECHNIQUE
In determining the sample size, the researcher deemed it
wise that population of the study should be subjected to a
theoretical model so that the selection will not be biased. After
due consideration, the researcher decided to use Taro Termini
theoretical model which is;
51
n = N 1 + N (e)2
Where n = desired sample size
N = population targeted
e = Acceptance error margin (5%)
Applying the above formular
n = 330 1 + 330(0.05)2
n = 330 1 + 330(0.0025)
n = 330 1 + 0.825 n = 330 1.825
S = 180.82
3.5 METHOD OF DATA COLLECTION
The researcher used a well organized and structured
questionnaire as an instrument for this research work. The
questionnaire was developed based on the researcher‟s
52
knowledge of the researched topic and the results of the survey
conducted on sited with some official.
In both, open-ended question were used, this is to enable the
respondents express their views freely where it was deemed
necessary. Out of which 336 questionnaires were distributed,
330 copies were completed and returned.
3.6 METHOD OF DATA PRESENTATION AND ANALYSIS
The researcher used some basic statistic techniques for
data presentation and analysis. This includes Likert Scaling
Model which is used to analyze questions outside the test of
hypothesis and Z test model would be used in testing the
hypothesis formulated.
3.6.1 LIKERT SCALING MODEL
A part from the test of hypothesis; the evaluations of
responses were ranked using 5 – points Likert Scale, which
include,
53
INTERPRETATION OF THE USED
WORD
POINT
Strongly Agree SA 5
Agree A 4
Strongly Disagree SD 3
Disagree D 2
Undecided UD 1
NOTE: Any factor that is below 3.0 were regarded as
negative while factors with the mean score of 3.0 or
above were regarded as positive
3.6.2 Z TEST MODEL
The Z test model will be used in testing only the
hypothesis formulated in chapter one of this research work. The
Z test model is;
Z = X1 – X2
S21 + S22 n1 + n2
54
Where; X1 = means of sample I
X2 = means of sample II
S1 = variance of sample I
S2 = variance of sample II
n1 = sample size for sample I
n2 = sample size for sample II
Level of significance used = 5%
Decision rule: Accept Ho if the Z calculated is < the critical value
+ -1.96, but reject Ho if the Z calculated is > the critical value of
Z test of + -1.96
3.7 VALIDITY OF THE INSTRUMENT
The instrument used for this research is highly valid and
not biased because the questionnaire was structured in such a
manner that would enable the researcher to obtain relevant
information for the research work.
Tenet (1994:94) define validity as degree to which a test
measure, validity connotes a degree, to which an instrument of
55
measurement actually achieve the objective intended to
achieve.
An instrument is valid to the extent it is tailored to achieve
the research objectives
56
REFERENCES
Iwuji, U.B.C. (cd) (2001); Research Methods in Education and Social Science. Joe Mankpa, Publishers, Owerri.
Onyekwere Okpara et al (2005); Research for Academic Purposes. Enugu,, SI Demak Publishers Ltd Enugu.
Onwumere J. U. J. (2005); Business & Economic Research Method; Don Vinton Ltd Ikorodu Road‟ Lagos.
Udo, O. Godfrey (2004), A guild to Modern Research Methods. Enugu, Institute of Developmental Studies, University of Nigeria Enugu Campus
http://enafrik.com; Article 13860
57
CHAPTER FOUR ANALYSIS
4.1 PRESENTATION AND INTERPRETATION OF DATA
In the course of this research, the researcher
administered questionnaire to staff of the selected banks. To
ensue and compare investigation on this topic, the data
collected are presented in a tabular form.
In all, three hundred and thirty six (336) of the
questionnaires were distributed and administered but three
hundred and thirty (330) were completed and returned
representing 98% of the total copy.
4.1.1 COMPUTATION OF PERCENTAGES RETURNED AND UNRETURNED
Percentage Returned:
Let Percentage Returned = L
Where 336 Copies = 100%
330 Copies = L
58
L = 330 X 100 336 1
L = 98% = Percentage Returned
Where Unreturned Percentage
100% - 98% = 2%
2% = Unreturned
4.1.2 DATA ANALYSIS
This part presents the result of the study first, the sample
opinion of all the senior staff of these selected banks to really
confirm the impact of e-dividend payment to equity
shareholders. The questionnaire was well structured to suit the
relevance of the study and was analyzed and presented in
percentages.
59
DISTRIBUTION SHOWING THE RATE OF RESPONSE OF THE RESPONDENTS
QUESTIONNAIRE NUMBER OF RESPONDENTS %
Returned 330 98%
Unreturned 6 2%
Total 336 100%
Source: Field Survey, 2011
Response ratio = 98:2
On the above Table, it appears that out of 336 questionnaires
issued, 330 of the respondent returned their own, which
represents 98% from interpretation.
4.1.3 ANALYSIS OF RESPONSES FROM QUESTIONNAIRE
The following results below were obtained.
Question 1: Do you think that e-dividend payment will
encourage investors to invest more in the
economy?
60
Table 4.1
RESPONSE NO. OF RESPONDENT PERCENTAGE OF RESPONDENT
Agree 80 24
Strongly Agree 224 68
Disagree 26 8
Strongly Disagree 0 0
Total 330 100
Source: Analysis of sample returned 2011(See Q1)
From the response, it will be observed that greater
number of people strongly agree that e-dividend payment
will encourage investors to invest more in the economy.
Question 2: Do you think that there are some constraints
attached to the effective implementation of e-
dividend payment
61
Table 4.2
RESPONSE NO. OF RESPONDENT PERCENTAGE OF RESPONDENT
Yes 264 80
No 60 20
Total 330 100
Source: Analysis of sample returned 2011
From the response, it will be observed that 80%
responded positively that there are some constraints attached
to the effective implementation of e-dividend payment, while
20% responded negatively to the question.
Question 3: Do you think that e-dividend payment is the best
way to reduce unclaimed dividend in our economy?
62
Table 4.3
RESPONSE NO. OF RESPONDENT PERCENTAGE OF RESPONDENT
Agree 66 20
Strongly Agree 198 60
Disagree 33 10
Strongly Disagree 33 10
Total 330 100
Source: Analysis of sample returned 2011
The response from the table above shows that 60% of the
respondents strongly agree that e-dividend payment is the best
way to reduce unclaimed dividend in our economy.
4.2 TEST OF HYPOTHESIS
STATEMENT OF HYPOTHESIS I
Ho: The impact of e-dividend payment to equity holders is not
encouraging.
H1: The impact of e-dividend payment to equity holders is
encouraging.
63
THE RESPONSE
ALTERNATIVE
RESPONSE
FREQ. Ho H1
% %
SA 26 8% 132 40%
A 53 16% 79 24%
SD 132 40% 53 16%
D 93 28% 46 14%
UD 26 8% 20 6%
TOTAL 330 100% 330 100%
Source: Field Survey, 2010
COMPUTING MEANS AND VARIANCE OF Ho
X ƒ ƒx X2 X2ƒ
1 26 26 1 26
2 93 186 4 372
3 132 396 9 1188
4 53 212 16 848
5 26 130 25 650
Total 330 950 55 3084
64
Mean X = X = ∑ƒx ∑ƒ
X = 950 = 2.88 330
Variance S21 = ∑X2ƒ - (∑ƒX)2
∑ƒ ∑ƒ
= 3084 - (950)2 330 330
= 9.35 - 8.29
S21 = 1.06
COMPUTING MEAN AND VARIANCE FOR H1
X ƒ ƒx X2 X2ƒ
1 20 20 1 20
2 46 92 4 184
3 53 159 9 477
4 79 316 16 1264
5 132 660 25 3300
Total 330 1247 55 5245
65
Mean X2 = X1 = ∑ƒx ∑ƒ
X = 1247 = 3.78 330
Variance S21 = ∑X2ƒ - (∑ƒX)2
∑ƒ ∑ƒ
= 5245 - (1247)2 330 330
15.9 - 14.28
S21 = 1.62
Z = X - X2 S2
1 + S22
n1 n2
Z = 2.88 - 3.78 1.06 + 1.62 330 330
Z = - 0.9 2.68
330
66
Z = -0.9 0.00812121
Z = -9.99
DECISION RULE: The Z test calculated value (-9.99) is greater
than the Z test critical value (+ -1.96), Ho is
rejected, while H1 is accepted, we therefore
conclude that the impact of e-dividend to
equity holders is encouraging.
STATEMENT OF HYPOTHESIS II
Ho: E-dividend payment does not reduce the issue of
unclaimed dividend.
H1: E-dividend payment reduces the issue of unclaimed
dividend.
67
THE RESPONSES
ALTERNATIVE RESPONSE
FREQ. Ho H1
% %
SA 26 8% 152 46%
A 46 14% 79 24%
SD 132 40% 66 20%
D 86 26% 20 6%
UD 40 12% 13 4%
TOTAL 330 100% 330 100% Source: Field Survey, 2011
COMPUTING THE MEANS AND VARIANCE FOR HO
X ƒ ƒx X2 X2ƒ
1 40 40 1 40
2 86 172 4 344
3 132 396 9 1188
4 46 184 16 736
5 26 130 25 650
Total 330 922 55 2958
Means X2 = ∑ƒX ∑ƒ
= 922 = 2.8 330
Variance S21 = ∑X2ƒ - (∑ƒX)2
∑ƒ ∑ƒ
= 2958 - (922)2 330 330
68
= 9 - 7.81
= 1.19
COMPUTING THE MEANS AND VARIANCE FOR H1
X ƒ ƒx X2 X2ƒ
1 13 13 1 13
2 20 40 4 80
3 66 198 9 594
4 79 316 16 1264
5 152 760 25 3800
Total 330 1327 55 5751
Means X2 = ∑ƒX ∑ƒ
= 1327 = 4.02 330
Variance S21 = ∑X2ƒ - (∑ƒX)2
∑ƒ ∑ƒ
= 5751 - (1327)2 330 330
= 17.42 - 16.1604
= 1.26
69
Z = X - X2 S2
1 + S22
n1 n1 Z = 2.8 - 4.02 1.19 + 1.26 330 330
Z = - 1.22 2.45
330
Z = - 1.22 0.0074242424 = -1.22 = -14.16 0.086
Decision Rule: The Z test calculated (-14.16) is greater than
the Z test critical (+ -1.96), which implies that
e-dividend payment really reduces the issue
of unclaimed dividend.
70
STATEMENT OF HYPOTHESIS III
Ho: - E-dividend payment does not enhance the effectiveness of
dividend payment to equity shareholders.
H1:-E-dividend payment enhances the effectiveness of dividend
payment to equity shareholders.
THE RESPONSES
ALTERNATIVE
RESPONSE
FREQ. Ho H1
% %
SA 26 8% 132 40%
A 53 16% 79 24%
SD 132 40% 46 14%
D 93 28% 53 16%
UD 26 8% 20 6%
TOTAL 330 100% 330 100%
Source: Field Survey, 2011
COMPUTING THE MEANS AND VARIANCE FOR HO
X ƒ ƒx X2 X2ƒ
1 26 26 1 36
2 132 264 4 528
3 93 279 9 837
4 26 104 16 416
5 53 265 25 1325
Total 330 938 55 3142
71
Means X2 = ∑ƒX ∑ƒ
= 938 = 2.84 330
Variance S21 = ∑X2ƒ - (∑ƒX)2
∑ƒ ∑ƒ
= 3142 - (938)2 330 330
S21 = 9.52 - 8.08
= 1.44
COMPUTING THE MEANS AND VARIANCE FOR H1
X ƒ ƒx X2 X2ƒ
1 20 20 1 20
2 46 92 4 184
3 53 159 9 477
4 79 316 16 1264
5 132 660 25 3300
Total 330 1247 55 5245
Means X2 = ∑ƒX ∑ƒ
= 1247 = 3.78 330
72
Variance S21 = ∑X2ƒ - (∑ƒX)2
∑ƒ ∑ƒ
= 5245 - (1247)2 330 330
= 15.9 - 14.28
S21 = 1.62
Z = X - X2 S2
1 + S22
n1 n1 Z = 2.84 - 3.78 1.44 + 1.62 330 330
Z = - 0.94 3.06
330
Z = - 0.94 0.00927273 = -9.76
73
Decision Rule: Since Z test calculated value (-9.76) is greater
than the Z test critical value (+ -1.96), Ho is
rejected, while H1 is accepted we therefore
concludes that e-dividend payment enhances
the effectiveness and efficiency of dividend
payment to equity shareholders.
4.3 IMPLICATION OF RESULT
These findings are based largely on the information
gotten from the research questionnaires administered to
employees in the Nigeria banking industry. The following are
the major implications of the study:
(1) That e-dividend payment affects equity holders in the
Nigeria banking industry positively.
(2) That e-dividend payment in the bank has helped in
speeding up services to equity holders in the banking industry.
74
(3) That the use of computer in Nigeria banks has enhanced
prompt calculation and payment of e-dividend to equity holders.
(4) That e-dividend payment in Nigeria banks has generally
reduced the stress and problems encountered by equity holders
in Nigeria banking industry.
(5) Also e-dividend payment to equity holders has been
encouraging
(6) E-dividend payment has reduced the issue of unclaimed
dividend
(7) With the introduction of E-dividend payment, Nigeria
equity holders earn dividends accordingly
(8) E-dividend payment encourages investors to invest more in
the economy
75
CHAPTER FIVE SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATIONS
5.1 SUMMARY OF FINDINGS
The main purpose of this research study was to examine
the impact of e-dividend payment in the banking industry equity
holders, especially in Finback Plc and UBA Plc, if possible
proffer solutions as to how to enhance the effectiveness of
dividend payment to equity holders.
The findings emanating from this study are as follows;
I. The research survey revealed that inadequate trained
personnel handle e-dividend payment.
II. The researcher also observed that lack of pre-installation
planning, as computers installed in some banks have been
found inadequate to facilitate e-dividend payment
automatically.
III. The study further revealed that most banks fail to extend
computer services to their e-dividend unit; they only
76
computerize their receiving units and conventional payment
units.
IV. Also it was revealed that frequent breakdown of
transmitting area network program, online and offline
problems and subsequent system failure is highly
occasioned by epileptic power supply.
V. From the study it was revealed that slow processing
speeds of most bank computers are not encouraging.
VI. Finally, the frequent inability to dispense cash, frequent out
of service and the inability to send instant sms of the
automated teller machine on credit alert posses a serious
problem to the equity holders breakdown of the automated
teller machines and its inability to dispense cash.
Based on the above findings, the researcher can then
proceed to make hi conclusion.
77
5.2 CONCLUSION
The study shows that three sets of factors can impact on
the payment of e-dividend to equity holders in the banking
industry.
The first comprises of external factors – regulatory
pressure (SEC), market pressure, supporting industries, and
government support.
The second consists of organizational factors – Top
management support, organizational competence and IT
capacity.
While the last set comprises technology factors –
perceived benefits, perceived compatibility and perceived
simplicity.
All these factors will positively or negatively influence the
payment of e-dividend method among Nigerian banks.
This study is an attempt to identify the factors that
determine the impact of e-dividend payment in Nigeria banks.
78
The objective of the study was to understand the factors that
could impact e-dividend payment to equity holders in the
Nigeria banking industry, using Finbank Nigeria Plc and UBA
Nigeria Plc as a case study.
5.3 RECOMMENDATIONS
Based on the findings of the study, the following can be
recommended in order to encourage e-dividend payment by
Nigerian banks.
1) External Business Environment: - external business
environment must be made conducive to the adoption of
e-dividend system by banks. This can be achieved by
formulation and implementation of appropriate public
policies by various tiers of government. The
establishment of supporting industries should be
facilitated and encouraged.
79
2) Regulatory authorities, Security and Exchange
Commission should make to be effective and efficient in
discharging of their duties.
3) Government should provide necessary infrastructural
facilities (e.g. electricity supply situation should be
improved) necessary for the support of the industry and
ensure healthy competition in the banking system.
4) Improvement in service delivery by the telecommunication
industry in the country from its current epileptic condition.
5) Internal Business Environment should be made
favourable to the adoption and payment of e-dividend
system, that is, the top management should be supportive
and receptive to new idea: business facilities should be
able to support the innovation or bank should update and
equip them with necessary trainings and facilities to
enable them handle the challenge.
6) Increased Computer Service: it would pay banks to
subject a lot of their banking functions to computer
80
application, some of these computer services include
modern telecommunication and information technology,
which include telephone, Local area network, Computer
system, Magnetic Link Character Recognition (MLCR),
Very Small Aperture Terminal (VSAT), Electronic fund
Transfer and Wireless Radiophone. These new banking
innovations should be introduced and encouraged to
facilitate payment of e-dividend to equity holders in the
Nigeria banking industry.
However, this research work could not exhaustively
discuss all the impact of e-dividend payment to equity
holders in the Nigeria banking industry. The researcher
also suggests that further research should be carried out.
81
Questionnaire
Please tick (√) against the option chosen
SECTION A: PERSONAL DATA
1). Sex: (A) Male (B) Female
2). Age: (A) 20-29 (B) 30-39 (C) 40-49
(D) 50 & Above
3). Marital Status: (A) Single (B) Married (C) Divorce
(D) Widower
SECTION B: Basic Research Questions
4.) How long have you been in the Bank?
(A) 1-5yrs (B) 6-10yrs (C) 11-15yrs
(D) 16-20yrs (E) 20-25yrs
5.) Bank/ Branch/ Department
______________________________________________________
6.) Do you agree the introduction of E-dividend payment in the bank
has helped in speeding up
services to equity holders in the banking industry?
(A) Agree (B) Strongly Agree
(C) Disagree (D) Strongly Disagree
7.) Are their any expected impact on the use of E-dividend payment to
equity holder?
(A) Yes (B) No (C) Do Not
now
8.) The use of computer in your bank enhanced prompt calculation and
payment of E-dividend
to equity holders?
82
(A) Agree (B) Strongly Agree
(C) Disagree (D) Strongly Disagree
9.) Would you say that the use of E-dividend payment in your bank has
generally reduced
the stress and problems encountered by banking industry equity
holders?
(A) Agree (B) Strongly Agree
(C) Disagree (D) Strongly Disagree
10.) Does your bank has a department for E-dividend payment?
(A) Yes (B) No (C) Do Not Know
11.) Has the impact of E-dividend payment to equity holders been
encouraging?
(A) Agree (B) Strongly Agree
(C) Disagree (D) Strongly Disagree
12.) Is there any problem associated with E-dividend payment to equity
holders?
(A) Yes (B) No (C) Do Not Know
13.) Do you agree that E-dividend payment has reduced the issue of
unclaimed dividend?
(A) Agree (B) Strongly Agree
(C) Disagree (D) Strongly Disagree
14.) With the introduction of E-dividend payment, do equity holders earn
dividends accordingly?
(A) Agree (B) Strongly Agree
(C) Disagree (D) Strongly Disagree
83
15.) Has E-dividend payment enhanced the effectiveness of dividend
payment to equity
shareholders?
(A) Agree (B) Strongly Agree
(C) Disagree (D) Strongly Disagree
16.) Do you think that E-dividend payment will encourage investors to
invest more in the economy?
(A) Agree (B) Strongly Agree
(C) Disagree (D) Strongly Disagree
17.) Do you think that there are some constraints attached to the effective
implementation of
E-dividend payment?
(A) Agree (B) Strongly Agree
(C) Disagree (D) Strongly Disagree
84
BIBLIOGRAPHY
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templates; from wikipedia the free encyclopedia http://www.smartinvestorafrica.com; E-dividend Answer to Unclaimed dividend
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APPENDIX I University of Nigeria, Enugu Campus
Faculty of Business Administration Department of Banking and Finance
Enugu Sate. Dear Sir/Madam,
I am Nworie Uchechukwu Mercy a student in the University of
Nigeria, Enugu Campus. I am carrying out research work on the
effect of e-dividend payment on banking industry equity holders in
Enugu state (a study of Fin Bank Plc and UBA Plc).
The project being undertaken is purely an academic work for the
fulfillment of the Award of Masters in Business Administration (MBA)
in the faculty of Business Administration of the above-named
institution. Response to these questions will be treated in confidence
and purely for academic purpose.
Thanks.
Yours faithfully, Nworie Uchechukwu Mercy PG/MBA/07/46704