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

Complete Material Chapters of Liquidity Management Practice At First Bank of Nigeria

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
2.5 Research Gaps
2.6 Summary of Literature Review
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)

Is the topic “Influence of Conflict Management on Organizational Productivity” recommended for Industrial Relations and Personnel Management (IRPM) Project?

Yes it is highly recommended — Conflict Resolution is a skill any organization requires, as no organizations actually exist without the existence of conflict. The study was carried to investigate the Influence of Conflict Management on Organizational Productivity using Seven-Up Bottling Company as a case study. In achieving this aim, the following specific objectives were laid out to examine the impact of conflict on organizational productivity, find the means of managing conflict with the organization and emphasized the relationship between conflict and the organizational productivity. 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 150 (one hundred and fifty) respondents were selected for this study to represent the entire population …

Can the material for “Linguistic Features of Nigerian English and Their Implications for 21st Century English Pedagogy” be used as a guide for English Education Project?

Yes it can be used — This research paper examines the processes of the Linguistic Features of Nigerian English and Their Implications for 21st Century English Pedagogy. In achieving this aim, the following objectives were set out to identify the linguistic features of Nigerian English and Their Implications for 21st Century English, Characterize the features of linguistic that occurred in the English Pedagogy, ascertain the meanings given to some of the lexical items that are rooted in their original meanings, ascertain the meaning of the commonly used linguistic features in Nigerian English Pedagogy, and discuss the extent of use and acceptability of these evolved linguistic features. The inability of the English language to perfectly capture aspects of Nigerian culture is necessitated by the fact that the …

Is the topic “The Effect of Teaching and Learning Environment on the Academic Performance of the Pupils in Selected Primary School” recommended for Education Project?

Yes it is highly recommended — This research project is based on “The Effect of Teaching and Learning environment on the academic performance on the pupils in selected primary school of Odeda Local Government” The word academic environment constitutes the total surrounding of the pupils where they find themselves. In view of this, the research tries to identity the best and acceptable environment that constitute effective teaching and learning toward the achievement of the academic performance of primary school pupils in Odeda Local Government. To achieve this, the research based his study in find out the teaching and learning environment that can have effect on the academic performance on the pupils, such as the home of the pupils, school, religion institution, peer group, community, social clubs …

Can the material for “Design and Implementation of an Expense Manager System” be used as a guide for Computer Science (CS) Project?

Yes it can be used — The Expense Manager is a multi-purpose finance related application intended to run on internet accessible devices. It is designed efficiently to give an individual the best suggestions for finance planning. The aim of the study is to Design and Implement an Online Expense Manager System. In achieving this aim the following objectives were laid out as follows to design and develop an application software that will keep track of all an Organization daily transactions and money lent or borrowed and suggest the best investment options and offers in popular categories. The motivation that led to the implementation of the proposed system is that there is no proper data consistency, some critical inputs may be missed and manual errors may occur …

Can the material for “Design and Implementation of Enhanced Student Result Generation System” be used as a guide for Computer Science (CS) Project?

Yes it can be used — Problems such as results delay, errors and human mistakes encountered with results management system in some academic environment are complex and worrisome. This fuelled the need for this project which has favorable addressed some of this problems. This research work gave birth to a three tier web based application developed to provide relief to some of the problems associated with result computations such as its susceptibility to human error and time consuming nature. This system has proven to be efficient, accurate and has being able to address these challenges encountered during result computation. It has also addressed, solved, greatly reduced error percentage and enhanced the delivery time of result. …

Can the material for “Survey of Preservation and Conservation of Local History Collections in Nigeria” be used as a guide for Library and Information Science (LIS) Project?

Yes it can be used — This research study aims at identifying the presentation and conservation of Local history collections in Nigeria, a case study of National War Museum, Umuahia, Abia State. In the process of carry out this research, the researcher identifies the problems/constrain, methods/techniques adopted, the classes of artifacts kept and also proffer solutions to the effective procedures for preservation and of local history collection in a museum under study. in the study, the researcher observed among numerous variables that fumigation gives the best method of preserving the artifacts. In line with fumigation, the establishment also place priority attention by using air conditioner to control weather condition and which in its true senses brought about prolonging the life-span of artifacts. Based on the findings and available …

Is the topic “Planning of Educational Resources for School Effectiveness” recommended for Education Project?

Yes it is highly recommended — The study attempted to investigate the planning of educational resources for school effectiveness in selected secondary schools in Mainland Local Government Area of Lagos State. The study equally reviewed some important and extensive literatures under sub-headings. The descriptive research survey design was applied in the assessment of respondents’ opinions towards the subject matter. In this study, four null hypotheses were formulated and tested with the application of t-test and the Pearson Product Moment Correlational Coefficient Statistical tools at 0.05 significance level. Also, the simple percentage frequency counts was used to analyse the questionnaire response of the selected respondents together with the research questions. A total of 200 (two hundred) respondents, 50 (fifty) teachers and 150 (one hundred and fifty) students were …

Can this topic “Evaluation of Calcium in Cheese for Recommended Dietary Allowance” be used for Agricultural Engineering (AE) Project?

Yes it can be utilized for research — Cheese, a popular food across many cultures has been subject of many studies. It’s of many variants, providing huge nutritional value to humans. One of those many nutrients is calcium. Calcium helps the body in building bone structures amongst other important functions. In this study, we aimed at determining the proportion of calcium content in cheese. Thus, recommending a daily intake of cheese for Recommended Dietary Allowances (RDAs) for calcium. Samples of Cheese were collected from five zones in the Lagos environs. Atomic Absorption Spectroscopy (AAS) and Titrimetric methods were used for determining the calcium content. The two methods used in this analysis have showed to be appropriate for the determination of calcium in cheese. From the results, the calcium …

Can this topic “Evaluation of Liquidity Assets Management in First Bank of Nigeria Plc” be used for Banking and Finance (BF) Project?

Yes it can be utilized for research — The language of business is money, and money is the business of financial institutions. No business be it large, medium or small − scale can survive without finance, therefore. Financial institutions should try as much as possible to develop their credit policies, as they are the target sources of finance available to the small − scale enterprises. For many years the importance of small scale industries Vis − a- vis their role in the economic development of Nigeria can never be overemphasized, so their need for long − term finance increase. Inspite of the government’s effort in assisting the development and strength of small-scale industries, the assistance given by the financial institution still remains inadequate. The major problem confronting small scale …

Can the material for “Creating Employment Opportunities Through Co-operative Movement” be used as a guide for Cooperative Economics and Management (CEM) Project?

Yes it can be used — Cooperative movement is a system of economic action and business enterprise characterized by the absence of the profit motive and involving as it’s primary function, the distribution of goods and services. The study was carried out to investigate the Co-operative Movement on Creating Employment Opportunities in Ogbaru Local Government Area, Anambra State. In achieving this aim, the following specific objectives were laid out to determine the factors militating against the creation of employment opportunities by the cooperatives movement and identify the type of the employment opportunities created by cooperatives movement in the area under study. 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 …