Chapter One — 1.1 Background to the Study

In recent years, Working Capital Management has emerged as a critical factor shaping customer retention across organizations operating in and around Ogun State. As institutions grapple with the pressures of globalization, regulatory reform, and shifting stakeholder expectations, understanding how working capital management relates to customer retention has become an important area of both scholarly and practical concern.

Ogun State presents a useful setting for examining this relationship precisely because the conditions there — structural, regulatory, and behavioural — differ from those typically assumed in the broader literature, most of which draws on evidence from more developed economies.

1.2 Statement of the Problem

Despite a growing body of literature on working capital management, there remains limited consensus on the precise nature of its relationship with customer retention, particularly within Ogun State. Many organizations continue to make decisions about working capital management without a clear, evidence-based understanding of how those decisions ultimately affect customer retention. This gap between practice and empirical understanding is the central problem this study seeks to address.

1.3 Objectives of the Study

1. To examine the effect of Working Capital Management on customer retention in Ogun State.
2. To assess the extent to which working capital management influences customer retention within the study area.
3. To identify the challenges associated with working capital management in relation to customer retention.
4. To recommend strategies for optimizing working capital management in order to improve customer retention.

1.4 Research Questions

1. What is the effect of working capital management on customer retention in Ogun State?
2. To what extent does working capital management influence customer retention within the study area?
3. What challenges are associated with working capital management in relation to customer retention?
4. What strategies can be adopted to optimize working capital management in order to improve customer retention?

1.5 Significance of the Study

This study is significant to a range of stakeholders. For policymakers and regulators, the findings offer evidence to guide the design of frameworks that support healthier outcomes around customer retention. For managers and practitioners within Ogun State, the study provides practical insight into how working capital management can be better managed. Finally, it contributes to the academic literature on finance / banking by extending existing knowledge into a specific empirical context, and offers a reference point for future researchers.

1.6 Scope of the Study

In terms of scope, this BSc study confines itself to Ogun State, focusing specifically on how working capital management relates to customer retention within that setting. Findings are interpreted within these boundaries rather than as universal claims applicable to every organization or market.