THE IMPACT OF INEFFECTIVE BUDGETARY CONTROL ON BANK FAILURE AND ITS IMPLICATIONS FOR ORGANIZATIONAL SUSTAINABILITY IN THE NIGERIAN ECONOMY

CHAPTER ONE INTRODUCTION 1.1 Background of the Study Budgetary control refers to the process of ensuring that organizational plans outlined in the budget are successfully implemented by applying appropriate corrective actions whenever deviations occur. This process involves assigning responsibilities for achieving budget targets, evaluating actual performance, and comparing it with planned outcomes. As such, budgetary control is just as critical as the formulation of the budget itself (Pandey, 2003). Every organization that seeks long-term survival—whether in the public or private sector—sets certain objectives or goals that it strives to achieve using its available resources. These goals typically include ensuring sustainability in a highly competitive and often challenging business environment (Bissfield, 2002), maximizing profitability, and fulfilling certain levels of social responsibility to the communities in which they operate. However, since resources are always limited, proper planning becomes essential to achieving these goals. One of the most vital tools for such planning is budgeting. A budget is essentially a forward-looking plan of action that outlines the organization’s intentions for a specific period. Yet, merely creating a budget is not sufficient. Without effective implementation and oversight, even the most well-crafted budget may fail to yield the desired outcomes. Therefore, the successful execution of budgetary plans requires a robust system of control mechanisms. 1.2 Statement of the Problem Today's business environment is marked by fierce competition, rapid product innovation, technological advancement, diversification, and other strategic moves—all aimed at achieving business success. However, it is evident that not all businesses succeed. While some organizations thrive, others collapse (Bissfield, 2002); some are liquidated, and others are absorbed by more dominant companies. Nonetheless, a number of businesses do manage to survive and grow, even amidst a hostile economic climate. Recently in Nigeria, several business organizations—especially banks—have been classified as distressed, while others continue to operate successfully. In the manufacturing sector, some companies have halted production entirely, whereas others are operating significantly below their installed capacity (Bissfield, 2002). The list of struggling organizations continues to grow. This situation raises a pertinent question: why do some organizations fail to survive, while others flourish under similar economic conditions? Could effective budgeting and budgetary control play a role in influencing organizational survival? This research seeks to examine the role of effective budgetary control in ensuring organizational sustainability, using United Bank for Africa (UBA) as a case study. UBA stands out as one of the few companies in Nigeria that has consistently demonstrated positive business performance. Over the past four years, the bank has recorded steady growth in its turnover and profit margins, despite the country’s challenging economic climate. This study aims to explore whether UBA’s ability to sustain and grow its business can be attributed, at least in part, to its system of budgetary control. 1.3            OBJECTIVE OF THE STUDY The objective associate with this study include: i.To determine whether budgeting is an effective management tool in organizations ii.To determine whether budgetary control has contributed to the success and survival of most set ups. iii.To determine whether some organization would still have achieved success without effective budgetary control iv.To determine whether participatory budgeting aids effective budgetary control v.To determine the impact of deviation from established budgets vi.To assess the relevance of management principles on budgetary control vii.To make recommendation on how to improve performance in organiztions. 1.4 RESEARCH QUESTION The following questions have been prepared to guide the study i.Is budgeting an effective management tool in organizations? ii.Has budgetary control contributed to the success and survival of most set ups? iii.Would some organization still have achieved success without effective budgetary control? iv.Does participatory budgeting aids effective budgetary control? v.What is the impact of deviation from established budgets? vi.What is the relevance of management principles on budgetary control? vii.What are the recommendation on how to improve performance in organiztions? 1.5 RESEARCH HYPOTHESES The stated hypotheses have been formulated to guide the study H0: Bank fail effective budgetary control is not an instrument for organizational survival in Nigeria economy Ha: Bank fail effective budgetary control is an instrument for organizational survival in Nigeria economy 1.6 SIGNIFICANCE OF THE STUDY The findings of the study will assist organizations in strengthening their corporate governance and risk management practices, ensuring they are better prepared to face external shocks, such as economic downturns or financial sector instability, which can lead to bank failures. This will lead to more resilient organizational structures. Findings of the study will also be significant to the academic community as it will contribute to the existing literature, add to library resources and serve as a guide to future academic researchers 1.7            SCOPE OF THE STUDY The study focus on The Impact of Ineffective Budgetary Control on Bank Failure and Its Implications for Organizational Sustainability in the Nigerian Economy. Empirically, the study will determine whether budgeting is an effective management tool in organizations, determine whether budgetary control has contributed to the success and survival of most set ups, determine whether some organization would still have achieved success without effective budgetary control, determine whether participatory budgeting aids effective budgetary control, determine the impact of deviation from established budgets, assess the relevance of management principles on budgetary control and make recommendation on how to improve performance in organiztions. Geographically, the study will be delimited to guarantee trust bank (GTB) Alagbaka quarters Akure, Ondo State. 1.8 LIMITATION OF THE STUDY Budgetary control measures shall be the focus of our study we may not present budget schedules as this is outside the scope of our study, but rather we shall present, state some problems encountered during the period of data collection. Their was the problem of time to interview management and staff, time to visit various organization and time to re evaluate the responses to questionnaires. All these time were not adequate hence time became a constraint. A study of this nature would require financial assistance from either the government or private bodies but since this was not possible the researcher utilized the limited resource available to him. Some questionnaire administered on management and staff of the organization visited was not returned some were returned unanswered while some came back with incomplete answers. All these limited our sample size form what it was originally intended. 1.9 DEFINITION OF TERMS Bank Failure: Definition: A situation where a bank is unable to meet its financial obligations, often resulting in insolvency, liquidation, or takeover by regulatory authorities. Budgetary Control: A management tool used to monitor and regulate organizational expenditures and revenues by comparing actual financial performance with the planned budget Organizational Survival: The ability of an organization to continue its operations, maintain financial stability, and thrive in the face of challenges or adverse conditions