LIQUIDITY MANAGEMENT PRACTICE AT FIRST BANK OF NIGERIA PLC. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
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.
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.