This study examined the impact of liquidity performance in commercial using First Bank of Nigeria Plc as case study. Secondary data used in this study were carried from text books, journals, magazines and newspaper. Our findings indicate that there was a positive relationship between liquidity management and the existence of any banks. Based on this findings we recommend that should be prudent in extending credit facilities to their client/customers to avoid problem of load loss management and competence in banking system should be enhanced to increase asset quality.




The impact of liquidity position in management of financial institution and other economic unit have remained fascinating and intriguing, though very elusive in the process of in investment analysis visa- visa bank port folio management.

There appears to be an interminable argument in the literature over the years on the roles, meaning and determinants of liquidity and credit management. The Nigeria financial environment has noticed increase in credit which has become a problem to the country.

Credit control described as to maximize the value of the firm by achieving a trade a trade  off purpose  of credit control is  not to  maximize  sales or to minimize the risk of bad debt.

In   fact   the firm should   manage   it credit   in such   a   way that sales are expanded  to  an  extent to  which risk  remains  within  an  acceptable unit. These costs include the credit administration expenses bad debt, losses and opportunity cost of the fund field up in receivables, the aim of liquidity management should be to regulate and control these cost that cannot be

eliminated together.

According to Begg, fisher and Rudiger (1991:130) liquidity refers to the speed and certainty  with  which  an  asset  can  be  converted  back  into money (cash, income) whenever the

Asset holder desires, money itself is the most liquidity asset o  all liquidity management seeks to ensure attainment of the short term objective.

A liquid bank is one that stores enough liquid assets and cash together with the ability to raise funds quickly from other source to enable it meet its payment obligation and financial commitment in a timely manner.

Therefore according to Ngwu (2006:36) liquidity management is the act of storing enough funds and raising funds quickly from the market to satisfy depositor loan customer and other parties with a view to maintain public confidence.


Liquidity is considered as the success of as bank, therefore ay ineffectiveness in its management consuetude’s a huge problem i.e. it encounter a huge problem that  affect  the  affairs  of  the  financial  institution. This problems is therefore analyses here as the basis for this research study.

The analysis commence from the era of banking in inception in Nigeria through it growth stages and till what is it today. The initial bank  failures recorded were principal dues to inefficiencies in the management of the

liquidity of such bank which in one way or the other had something to do with either liquidity inadequacy and the relative inefficiency in their management.

As an institutional problem, it has persisted over the years, in determining the survival or otherwise of banks. Although it must be said that some relative degree of banking it is believed that any banking institutions that is properly managed and has adequate liquidity should be able to swim above troubled waters.

Problems sometimes also evolve from banks inordinate urge to make phenomenal profit. In the process of doing this there is the tendency for these banks to get carless in the resources utilization and particularly their management of liquidity.

The resultant effect is usually loss substance and consequently, loss accumulation, a situation which can lead to banking failure. The  marginal loans in the banking system calls to mind the important factor that national government of all` time preoccupy themselves with banks. This shows the degree of importance attached to liquidity and its management by these governments and deviation from its ratio or inadequacy of it management always spells trouble for the banking concerned.

The far reacting consequences of inadequate liquidity management can

also be examined. Apart from profit declines. Other of attendant consequences to a bank includes loss of confidence in the particular bank its inability to

fulfill both its short term and long-term obligation, lack of trust on the part o depositors and other customers alike; and the concomitant reduction in level of operations.

A recent example of the eminent distress facing Nigeria bank which is as a result of improper liquidity position management as well as loan loss- accumulation (marginal loans)


Considering the nature of banking itself which is a risk taking venture, i.e borrowing short and lending long one sees the indispensability of liquidity for a banks effective and profitable operation liquidity is needed to finance the gap created by mismatching funds. Again liquidity adequacy is a sure way of minimizing the risk portfolio of any bank. The need to put some family into the management of banks liquidity has always been considered a serious issue by the authorities and this has often influenced periodic prudential regulation. As a check on banks against holding excessive cash, Central Bank presently stipulated liquidity ratio of 24.69%, is considered by the Apex bank as being the reasonable maximum any an expression of the bank liquidity assets which comprise cash marketable securities and investments over the bank banks total liabilities (Ngwu 2006:56)

The objectives of the study include

(a). To examine in details  the  liquidity  position  of  banks  in  Nigeria using first bank Nigeria as a case study.

(b). To identify causes of illiquidity or factors that influence liquidity management.

(c). To examine how these banks are able to adjust their liquidity and control management in Nigeria financial environment.

(d). To analyses the consequences of inadequate of liquidity control management.

(e). To make some suggestion on policy guideline to the monitory authorities who can after banks current liquidity and credit management practices.


The essence that the respective bank should manage their balance sheet inn such a way as to operate within that maximum range and still remain liquid.

The basic questions this research attempt to answer includes: (a). what is the impact of liquidity position in management?

(b). what is the relationship between liquidity and profitability?

(c). what are the criteria for determining adequate liquidity for a bank? (d). how does liquidity influences a bank investment policy?

(e). what are the predicament of inadequate liquidity control management.


The study justification arises given the unsavory experience of the deregulated banking era in Nigeria and the present global economic meltdown. Apart from this liquidity has always been a source of concern with some Nigeria banks. The importance of liquidity has even acquired a new dimension in the advanced countries of the world in recent years. This is basically because of responses to structural changes and funds management techniques in these countries. The development of new technical innovations that do not necessarily fit into the world of the age long liquidity tests.

The key role played in any banking set-up further epitomizes it importance. Right from time liquidity has been associated with allocation of assets. According to their capacity to generate the cash necessary to satisfy creditors and depositor calls on the bank liabilities.

However, with the emergence of active liability management strategies liquidity has been more than a function, particularly in some instance of the of the banks capacity to acquire additional funds in the market place.

Limitation of the study

Time constraints were one of the limitations encountered in the  case  of  the study.

This is because, this study was carried out during an academic session, the researcher did not have enough time to properly concentrating on this particular study.

Secondly, finance was yet another problem that put a check  on  the extent of investigation.

Finally there was the problem of inadequate information and unavailable material or information for the study.


Due to time and resources constraints the study at hand has been limited to First Bank of Nigeria Plc.


The following definition terms are given to facilitate better understanding.


This is the act of storing enough funds and razing funds quickly from the market to satisfy depositors, Loan customers and other parties with a view to maintain public confidence.


A bank is a financial house established for the purpose of accepting deposits and lending out funds in addition to other services.

Central bank of Nigeria

This is the national apex and financial institution that regulates the banking system value supply and cost of finds in the economy.


The aggregation of financial market arrangement institutions agent that inter-act with each other and other economic unit together with the se of rules and regulation that guide their interactions.


This is the body which ensures that customer funds are insured in the commercial banks at liquidation they make sure the customer are paid bank their deposits.


This a class of financial metrics  that  are  used  to  asses  a  business  ability to generate earning and compared to it expenses and other referent  costs incurred during a specific period of time, for most of  these  ratios,  having  a higher value relative to a competitors ratio or the same ratio from a previous period is indicative that company is doing well.


This theory argues that banks should hold large sum of liquid assets to avert sudden payment request that might be received.


They are banks excess reserves on daily or short-term basis with the correspondent banks.


These are gifted securities with short-term maturity which are being bought and sold in active market.


This is a loan made by a brokerage house to a client that allows the customer to buy stocks on credit


This is a class of financial metrics that is used to determined a company ability to pay off its short term debts obligation. Generally the higher the value of the ratio, the larger the margin of safety that the company posses to over short-term debts.


Liquidity is the ability for the bank to have sufficient capital in it account or cash deposited by individuals and portfolio is any collection of financial assets such as stock bonds and cash it may be held by individual investor and or managed by financial professionals hedge financial institution, or a portfolio is a brief case for caring lose papers.




RESEARCHWAP.NET is an online repository for free project topics and research materials, articles and custom writing of research works. We’re an online resource centre that provides a vast database for students to access numerous research project topics and materials. guides and assist Postgraduate, Undergraduate and Final Year Students with well researched and quality project topics, topic ideas, research guides and project materials. We’re reliable and trustworthy, and we really understand what is called “time factor”, that is why we’ve simplified the process so that students can get their research projects ready on time. Our platform provides more educational services, such as hiring a writer, research analysis, and software for computer science research and we also seriously adhere to a timely delivery.


Please feel free to carefully review some written and captured responses from our satisfied clients.

  • "Exceptionally outstanding. Highly recommend for all who wish to have effective and excellent project defence. Easily Accessable, Affordable, Effective and effective."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I saw this website on facebook page and I did not even bother since I was in a hurry to complete my project. But I am totally amazed that when I visited the website and saw the topic I was looking for and I decided to give a try and now I have received it within an hour after ordering the material. Am grateful guys!"

    Hilary Yusuf, United States International University Africa, Nairobi, Kenya.
  • " is a website I recommend to all student and researchers within and outside the country. The web owners are doing great job and I appreciate them for that. Once again, thank you very much "" and God bless you and your business! ."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "Great User Experience, Nice flows and Superb functionalities.The app is indeed a great tech innovation for greasing the wheels of final year, research and other pedagogical related project works. A trial would definitely convince you."

    Lamilare Valentine, Kwame Nkrumah University, Kumasi, Ghana.
  • "I love what you guys are doing, your material guided me well through my research. Thank you for helping me achieve academic success."

    Sampson, University of Nigeria, Nsukka.
  • " is God-sent! I got good grades in my seminar and project with the help of your service, thank you soooooo much."

    Cynthia, Akwa Ibom State University .
  • "Sorry, it was in my spam folder all along, I should have looked it up properly first. Please keep up the good work, your team is quite commited. Am grateful...I will certainly refer my friends too."

    Elizabeth, Obafemi Awolowo University
  • "Am happy the defense went well, thanks to your articles. I may not be able to express how grateful I am for all your assistance, but on my honour, I owe you guys a good number of referrals. Thank you once again."

    Ali Olanrewaju, Lagos State University.
  • "My Dear Researchwap, initially I never believed one can actually do honest business transactions with Nigerians online until i stumbled into your website. You have broken a new legacy of record as far as am concerned. Keep up the good work!"

    Willie Ekereobong, University of Port Harcourt.
  • "WOW, SO IT'S TRUE??!! I can't believe I got this quality work for just 3k...I thought it was scam ooo. I wouldn't mind if it goes for over 5k, its worth it. Thank you!"

    Theressa, Igbinedion University.
  • "I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much, infact, I owe my graduating well today to you guys...."

    Joseph, Abia state Polytechnic.
  • "My friend told me about ResearchWap website, I doubted her until I saw her receive her full project in less than 15 miniutes, I tried mine too and got it same, right now, am telling everyone in my school about, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work"

    Christiana, Landmark University .
  • "I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!."

    Musa, Federal University of Technology Minna
  • "I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!."

    Ali Obafemi, Ibrahim Badamasi Babangida University, Niger State.
  • To contribute to our success story, send us a feedback or please kindly call 2348037664978.
    Then your comment and contact will be published here also with your consent.

    Thank you for choosing