LIQUIDITY MANAGEMENT PRACTICE AT FIRST BANK OF NIGERIA

ABSTRACT

Liquidity represent the ability to most efficiently accommodate decrease in deposit and fund increase in the loan portfolio, that is to meet the customers loan request fund commitment and line of credit.

A bank has liquidity when it has the ability to sufficient cash in a timely manner of a reasonable cost. The cost of obtaining liquidity is a function of market condition and the degree of risk reflected in the balance sheet. Those who are involved in the management of the source and the use of fund fund deposit in the commercial bank are raised to some degree.

There will be a thorough research to prove how the bank has been managing their liquidity and profitably. In this cause, both secondary and primary data were gathered and was analyzed. The primary source was the administration of questionnaire and oral interview while the secondary source was in form of literature reviews of some books, journals and newspaper.

A critical and statistical analysis was carried out on the data available to access the commercial bank assets and liability management in Nigeria, their efficiency and loopholes in the developing economy. Form the finding of the analysis, the research come up with a conclusion and a recommendation.

CHAPTER ONE

Introduction:

1.1 Background Of The Study

A bank is considered liquid when it has asset and investment in security that are easily reliable at a short notice without a loose to the bank together with the ability to raise fund from he other source, to enable it to meet its payment obligation and financial commitment in a timely manner. In addition there should be financial commitment buffer to meet almost all financial emergency.

Liquidity management of a commercial bank is a very vital issue in the banking industry. It is the ability of the bank to manage its liquidity position so that neither the liquidity nor the profitable will suffer. For this to be effective, liquidity management must contribute to the achievement of the overall cooperate fund management objectives to attain and maintain a balance of profitability, solvency and liquidity.

Obligation of the maximum liquidity owed by surplus unite can only be archived by holding enviable fund as cash since it has maximum profitability. The must invest all fund on loan and average the highest yielding, and most liquid of the entire asset in the bank.

Banks, because of the important role they play in the economy, particularly in monetary and credit aspect of the economy faces a lot of restriction irrespective of the fact that banks are the most highly and closely regulated of all the business, they still have to operate within the confines of the law and solve the problem of liquidity and profitability dilemma in the economy. Apart form the constraints and the dual role of liquidity and profitability, there is virtually no work on the liquidity management in Nigeria commercial banks. In the light of this, the researcher has decided to discuses this topic based on the analysis of the data collected. The researcher will suggest some solution the problem of liquidity management in the country.

1.2 Statement Of The Problems

Commercial bank asset management is a never-ending thing of war. This war is pitched between efficient liquidity management on one hand and profitability on the other hand. As Liquidity and profitability are two inherent goals in commercial bank, bank managers will continue to experience the conflict o trying provide efficient mechanism of addressing their bank liquid and hence their safety of necessarily arising from the nature of their liabilities.

A high proportion of commercial bank liabilities are made up of demand deposits (current account fund deposits) saving deposit, fixed deposit and fund from other source. Demand deposit are those bank liabilities that are payable on demand. Necessary commercial bank need to keep only liquid asset to meet a considerably volume of withdrawal. Liquid asset earn little of zero return on asset. It is les risky and the less it likely to yield adequate returns. As such, the high the less risky asset, the more banks is expose to experience a bank run or crisis. At that rate will probably not able to recover all its cost and then also make profit for the owners. But behold. Commercial bank are business oriented firm with their share holder interested on profitability. In other to satisfy its share holders, a bank might be attempted to forget liquidity and pursue profitability by investing on a high yielding less liquid asset that are profitable at the expense of liquidity which is dangerous. It is always necessary to balance liquidity and profitability in order to have efficient bank management.

The ratio or the percentage of idle cash balance in the commercial bank are to hold at any point in time and to what form to hold it is very necessary. While doing that, they should bear in mind the importance of satisfactory level of profit. There are many constraints to bank in achievement of their goal liquidity and profitability such as legal reserve requirement and they should maintain adequate liquidity to meet the unforeseen and seasonal loan demand and fluctuations of deposits. Cash reserves are also needed to take the advantage of unexpected profitability investment opportunities. In effect, banks are constrained and have to walk on a tight rope. There is the never ending of war or what I may refer to as dilemma policy commercial bank management in developing country. The Nigerian case is further aggravated by the inconsistency of the monetary policy as administered by the central bank of Nigeria. Is the reticent of the monetary coups detach. You will just walk up one morning and hear over the radio of via circular No XY2 that the central bank of Nigeria has issued a monetary circular No adjusting the private whether upward or downward.

The federal government directive on withdrawal on all federal parasttatals account from the commercial bank is one of such constraint. The stock stirred up aggressive market in the banking industry.

Although all this stock are necessary to produce the desired control of money in the economy, but such tends to give nightmare to the banking management. This directive causes ripples in the banking industry as such cause more discrepancy in the liquidity position of the commercial bank and subsequently the rate of profitability.

1.3 Objective Of The Study

The objectives of the study are;

To look at the liquidity management of the bank in Nigeria with more emphasis on their investment liquidity and profitability portion.
To found out why bank need to be more liquidity than any other business organization
To solve the liquidity − profitability problems of the banks. To look at the effectiveness and management of the portfolio, by employing and using various approach, theories and instrument in solving their liquidity profitability problems.
To examine the bank investment outlet (e.g. loan and advance investment in treasury bills. Banker unite fund, bankers certificate called money, equity participation in small and medium scale firms etc) and the degree of liquidity of such establishment shall be examined.
To take critical look of the asset portfolio management of banks with a view to determine if there is a relationship between the rate of profitability and liquidity.
To identify why Nigeria banks are excessively liquid and at the same time make high profit.

1.4 Significance Of The Study

The importance of liquidity management in the banking industry cannot be over − emphasized. Since not more contribution was made in the topic liquidity management, the researcher will carefully examine those relevant to efficient liquidity management for a successful achievement of the desired profitability.

It is hoped that the result obtained form the study will benefit the management and the non-bank financial institution, business enterprise and student of financial accounting, banking and finance student and other related course.

Readers of this study/work will be expose as regarding the input of future study. The basis of this research work is the position of liquidity of the Nigerian commercial bank as determinant of profitability.

1.5 Definition Of Term

Portfolio:

This is a list of security and investment loan stock, shares and lands held/owned by a bank, individual or and organization

Portfolio management:

This goes with the management of the security holding (investment portfolio of a bank or a business firm). A committee or portfolio management department or any other body might manage a portfolio.

Liquidity:

It is the ability of bank to pay cash immediately when called upon to do so for all of its demand liability.

Liquidity management:

It is the ability of the bank to manage the liquidity position so that neither the liquidity nor the profitability will suffer. It evolves the provision for the withdrawal of deposit, short term, and cash cyclical and satirical cash requirements.

Bank deposit:

These are fund deposited in a bank. It is divided into demand saving and time deposits

Demand deposit:

This also known as checking the account deposit payable on demand that is without pro notice of withdrawal.

Saving deposit:

This type of deposit is usually evidence by a past book under which the depositor customer of the bank is required to notify the bank before withdrawal, but it is not the same in practice.

Asset:

These are the entire property of a bank and other investment in other profitable organization.

Asset management:

It is the allocation of fund, the basic objective being the maximization of profitability, solvency and regulatory constraints.

Bank run:

A run occurs in a bank where there is mismanagement of liquidity and profitability.

…

CHAPTER TWO

2.0 Literature Review

2.1 Introduction

The review of relevant literature is the main topic of this chapter. A literature review covers theoretical and methodological contributions to a certain issue in addition to the state of knowledge at the time of writing. It provides information about the state of the art in relation to the subject you are writing about. It examines the body of work on the chosen subject. The literature evaluation in this study comprises the …

Procedure for Downloading the PDF (Docx) Material

Liquidity Management Practice At First Bank of Nigeria can be downloaded by requesting the full set of materials at the project or seminar cost. The document will be sent via Microsoft Word (MS-Word) format via WhatsApp (e-mail) following payment confirmation.

Seminar Material Cost
₦3,000

Project Material Cost
₦5,000

Request Complete Material

Click here to request the Complete Material via WhatsApp including;

Preliminary Pages,
Chapter 1-5,
References and Appendix.

TABLE OF CONTENTS
PRELIMINARY PAGES

Title page
Approval page
Dedication
Acknowledgement
Table of Contents
Abstract
CHAPTER ONE
INTRODUCTION
1.1 Background …
⋮
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
2.2 Conceptual Review
2.3 Theoretical Framework
⋮
2.4 Empirical Studies
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
3.2 Research Design
3.3 Population of Study
3.4 Sampling and Sampling Technique
3.5 Validation of Research Instrument
3.6 Method of Data Collection
3.7 Method of Data Analysis
3.8 Questionnaire Administration
3.9 Ethical Consideration
3.10 Statistical Analysis
CHAPTER FOUR
DATA ANALYSIS, RESULT AND DISCUSSION
4.1 Introduction
4.2 Presentation and Analysis of Data
4.3 Re-statement of Research Questions
4.4 Test of Hypotheses
4.5 Discussion of Findings
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Introduction
5.2 Summary of Findings
5.3 Conclusion
5.4 Recommendation
5.5 Suggestion for Further Study
REFERENCES
APPENDIX A - “QUESTIONNAIRE”

Disclaimer for Complete Material Utilization
The displayed research work titled "Liquidity Management Practice At First Bank of Nigeria" is stated as a research guideline towards accomplishing your assigned project / seminar research work. All the research materials on this website are ONLY for research purposes and should be used as a guideline in developing your research work. For no reason should you copy word for word as projectlist.com.ng will not be liable for any who copied the material. By ordering the complete research guideline, it signifies that you've accepted our terms of service.

Frequently Asked Questions (FAQ)

Can this topic “Real Estate Investment and It’s Associated Challenges in Nigeria” be used for Estate Management (EM) Project?

Yes it can be utilized for research — Real estate has continued to play a significant role in man's evolution. It is not a coincidence that food, shelter and clothing believed to be the three essentials that sustain mankind, also have some linkage to land. The aim of the study is to investigate the Real Estate Investment and It’s Associated Challenges in Nigeria. In achieving this aim, the following specific objectives were laid out to provide an overview of real estate investment in Nigeria, examine the challenges associated with real estate investment in Nigeria, and identify the way forward for real estate in Nigeria. During the period of economic boom in the 1970s in Nigeria, there was surplus capital, the economic climate then was favorable for the development …

Can the material for “The Impact of Leadership Styles on Staff Performance” be used as a guide for Economics Project?

Yes it can be used — Leadership style is the way which influence process is exercised. It is the characteristics ways in which the leadership relates to their employees. The study was carried out to investigate the Impact of Leadership Styles on Staff Productivity Performance in Imo State Polytechnic Library. In achieving this aim, the following specific objectives were laid out to find out the impact of Leadership Styles on Staff productivity and performance in this library and factors responsible for the choice of leadership style in the library of Imo state polytechnic, Umuagwo. The research design used in this report is descriptive design, utilizing questionnaire method to obtain information from the respondents for this project. Primary data were collected from the primary source which questionnaire …

Can the material for “The Effect of Cost Accounting Techniques on Performance of SMEs” be used as a guide for Entrepreneurship Project?

Yes it can be used — Cost accounting techniques is a task of collecting, analyzing, summarizing and evaluating various alternative courses of action. The study examines the effect of cost accounting techniques on performance of SMEs in selected SMEs firms in Port Harcourt. In achieving this aim, the following specific objectives were laid out to investigate the types of accounting records being kept and maintained by SMEs, evaluate factors hindering Cost accounting Techniques in SMEs in Port Harcourt and investigate the extent to which accounting information is being used in measuring financial performance by SMEs. The research design used in this report is descriptive design, utilizing questionnaire method to obtain information from the respondents for this project. A total of 250 (two hundred and fifty) respondents …

Can the material for “The Impact of Inflation on the Manufacturing Sector of the Nigerian Economy (1981-2011)” be used as a guide for Economics Project?

Yes it can be used — This study analyses the linkage between inflation rate and manufacturing sector of the Nigerian economy over the period of (1981-2011). The study used data sourced from the Central Bank of Nigeria (CBN). The ordinary least square technique (OLS) was used to specify and examine the relationship between the variables Government expenditure, inflation rate and money supply which are the independent variables and the manufacturing index which is the dependent variable for the first model. The independent variables for the second model are consumer price index, Nominal interest rate and exchange rate while the dependent variable is the manufacturing index. The explanatory power of the models was given by the R2 of 11.799% for the first model and 62.85% for the second …

Can the material for “Human Relations and the Office Manager’s Performance in Selected Firms in Port Harcourt” be used as a guide for Office Technology and Management (OTM) Project?

Yes it can be used — The Office Manager’s work is based on human relations to a very large extent. Human relations involve the activities and relationship resulting from the interaction of two or more people in an organization, human relations concern the reason for the degree of motivation they posses, by definition, the secretaries occupies an important position in an office. Recent research have shown that the position of a Office Manager and human relations in an organization, and the fact that most secretaries failed to exhibit good human relations between their colleagues and the general public, the researchers shall address the study to the following problems. Some office managers do not have good cordial relationship with their customers and their employers, and some of …

Can the material for “Problems and Prospects of Privatization and Commercialization in the Public Sector” be used as a guide for Public Administration (PA) Project?

Yes it can be used — This topic, problems and prospect of privatization and commercialization of power holdings company of nigeria in Nigeria is the attempt to help the general public to know about the privatization commercialization of power holdings company of nigeria in Nigerian. Moreover, to enable the public to contribute their own quota in the privatization issue and find out the problems and prospect associated with the porgammes. The chapter one deals with the introduction, the historical background of the programmes, and statement of problems objectives of study, significant of study, scope and limitation and lastly definition of terms. In this project writing the chapters one from chapter one to five which give the view of what privatization and commercialization of power holdings company of Nigeria …

Can the material for “Design and Implementation of IP based on Patient Monitoring System” be used as a guide for Computer Science (CS) Project?

Yes it can be used — The patient monitoring is a very critical monitoring system, it can monitor physiological signals including electrocardiograph (ECG), Respiration Rate, Invasive and Non-Invasive Blood Pressure, Oxygen Saturation in Human Blood (SpO2), Body Temperature and other Gases. The main aim of this project is to design an Internet Protocol (IP) patient monitoring systen for Teaching Hospital Nnewi for controlling the flow of patient’s data in the hospital. To achieve the stated objective, the following specific objectives were laid out to: develop a software using IP-based technologies a system capable of capturing and storing patients data for a teaching hospital, design a system that will be able to generate and manage bills of each patient, Proper recording of patients’ diagnosis, Keep proper track …

Can the material for “An Assessment of Participation in Outdoor Recreation Activities” be used as a guide for Urban and Regional Planning (URP) Project?

Yes it can be used — This research work assessed the level of participation in outdoor recreation in Yenagoa town, Bayelsa State, Nigeria. The study covered ten wards in which the town is organised, using one ward each for investigations into the availability of outdoor recreation facilities, access to them and the general pattern of recreation practices among the residents of the town. The ten communities were selected on the basis of the level of concentration and size of the population, with the highest being taken for the purpose of sampling. A sample size of 0.87% of the total population (42,463) was used based on sample size determining criteria by Krejcie and Morgan (1970) and 368 (0.87%) questionnaires were administered to household heads in the 10 sampled …

Is the topic “The Effect of Interest Rate on Savings in Nigeria” recommended for Insurance Project?

Yes it is highly recommended — This study examined the effect of interest rates on savings in Nigeria Using multiple regression analysis. The study also carried out some diagnostic tests like heteroskedasticity, serial correlation test and stability test. This work made use of secondary data sourced from the central bank of Nigeria statistical bulletin from 1981 to 2014. The result of this regression analysis showed that the coefficient of interest rate was positive and the level of significance, 0.05 was less than the p-value so interest rate has a positive but insignificant relationship with savings in Nigeria. The control variable used (GDP and government expenditure) also showed positive but insignificant relationship with savings. This simply means that interest rate has no significant effect on savings in …

Can the material for “An Appraisal of Communication as a Tool for Resolving Conflict in the Banking Industry” be used as a guide for Banking and Finance (BF) Project?

Yes it can be used — This study is a research work to assess an appraisal of communication as a tool of resolving conflict in banking industry. It was motivated by the desire to use, understand more closely the significant of communication as a tools of resolving conflicts. In carrying out this research work, five objectives was outlined, survey method of research was used. A questionnaire was designed and administered. The two hypothesis generated was properly analyzed using the chi-square, tables and percentage. The population was 100 and the sample size was 80. In my findings, it was discovered that many communications failed because of sender tries to convey everything that she or he knows about the subject which a message contains too much information, it is …