study investigates the impact of Liquidity and profitability as a survival
strategy for banks in Nigeria and selected Skye bank of Nigeria Pic as the case
study. It evaluates the relevance of Liquidity and profitability in the banking
industry and how it is managed. It also laid emphasis on risk associated with
banking business and how is been managed. The task of assets and Liabilities
committee of the bank, relationship between Liquidity and profitability, causes
of Liquidity and non-profitability. Roles of regulatory authority in banking
supervision in Nigeria and the specified liquid assets for financial
institution in Nigeria and the specified liquid assets for financial
institutions in general.
achieving the afore mention facts, secondary source was used to gather data,
specifically, financial statement, textbooks, past related project and
international network (internet) and journals was used to collect a valued and
reliable information of the bank for the project to provide the basis for
proper understanding of the impact of liquidity and profitability as an aspect
of assets and liabilities management in the administration of universal bank in
Objective of the study
Significance of study
Scope and Limitation of study
Definition of Operation
2.0 Literature review
2.1 Liquidity management
2.2 Problems of bank liquidity
2.3 Consequences of low liquidity
2.5 Consequences of low profitability
2.6 Causes of liquidity and non-liquidity in
2.7 Market risk
2.8 The relationship between liquidity and
2.9 Liquidity versus portability
2.10 The task of assets and liabilities committee.
2.11 Specified liquid assets for financial
2.12 The role of
regulatory authorities banking Supervision in Nigeria
Central bank of Nigeria (CBN)
Nigeria deposit insurance corporation (NDIC)
3.0 Research mythology
3.1 Research design
3.2 Population of study
and sampling technique
3.3 Types of data information for collection
3.3.1 Test of
validity and reliability
3.4 Method of data analysis
4.0 Data presentation, Analysis and
4.1 Data presentation
4.2 Data analysis and interpretation
5.0 Summary, conclusion and recommendation
5.1 Summary of findings
are engaged in essential activates, which entail balancing their liabilities
with the assets composition of the balance sheet in order to maintain
doubt the core business of banking, which is credit, involves from the surplus
unit of the economy and channel the funds soured to the deficit unit according.
deposit is mobilized at a cost of the bank and this cost is often called
interest. The deposit is channeled to the users who pay interest at higher rate
than the deposit rate.
primary objective of the bank is to make profit which is the difference between
the cost of deposit and other cost and the income form credit advance and other
investment. This pre supposed that a bank must ensure proper management of its
assets and liability has, both in composition and utilization in this way the
highest return is ushered in for all stakeholders in the business. It is true
that the lips service paid to assets and liabilities management in the banking
debacle of the 1980's hence it is important to work hard in order to avoid the
fails of the past and restore confidence in the industry.
impact of the regulations and the mode of insurance have been adduced by
scholars as playing significant role in banks. Liquidity crisis of the 1980's
specifically, the critics point at the central bank of Nigeria's directive to
the bank to lodge the naira equivalent of foreign exchange requests, the
withdrawal of public sector deposit from bank as some of the factors that
engendered the bank failure. To a large extent, the situation revealed the
fragile liquidity positions of Nigeria banks notwithstanding the contributory
role of central bank of Nigeria guidelines and directive.
important issue of note is that in the pursuit of profit maximization
objectives, bank must endear to balance credit extension push and liquidity
management in such a way that bank safety is not jeopardized.
OF THE STUDY
study seeks to achieve the following objectives.
To examine how banks establish,
maintains and manage an optimum balance between Liquidity and profitability.
To show the correlation between
Liquidity and profitability
To identify the basis for proper
understanding of the impact of liquidity and profitability as an aspect of
assets and liability management in the administration of deposit money bank.
To show banks manage various risk
associated with their operations.
To reveal the specified liquid assets
for financial institution and the degree of their liquidity and profitability.
1.3 STATEMENT OF PROBLEM
research work tend to address or examine the impact of liquidity and
profitability as a survival for banks in Nigeria visa-vis the maximization of
the cost of liquidity and maximization of profits to ensure bank solvency
1.4 RESEARCH HYPOTHESIS
the statement of problem and purpose of study the following hypothesis are
hypothesis [HO] there is no correlation between profitability and liquidity.
Alternative hypothesis [H I] there is correlation between profitability and
hypothesis [HO] the amount of loan and advances granted to customers does not
determine the bank profit levels.
hypotheses [HO] the amount of cash held by bank do not determine the liquidity
levels of a bank. Alternative hypotheses [HI] the amount of cash held with the
bank determine the liquidity level of a bank
OF THE STUDY
significance of this study is to provide the basis for proper understanding of
the impact of liquidity and profitability as a survival strategy for the banks
in Nigeria and as an aspect of assets and liabilities management in the
administration of deposit money banks and people in general and banks will know
the prudent ways in which their resources can be managed and economy as a whole
will be positively affected in various ways.
AND LIMITATION OF THE STUDY
scope of this study is limited to the analysis, interpretation and manipulation
of the information provided in the financial statement and manipulation of the
information provided solutions to the problem unveiled in the research problem.
The scope was expanded to how Nigeria banks manage their liquid assets to
statement by their nature only shows the aspect of the business that can be
qualified in monetary terms. But business generally among which deposit money
banks felt, have quantitative among which deposit money bank felt, have
quantitative aspects that cannot be qualified monetary, but they affect
positively or negatively the performance of the business. The example is the
effects of the retrenchment of some worker would have on the moral of other
workers and boost their efficiency and productivity.
effect on the efficiency and production directly or indirectly affect the
performance of the performance of the business but there can hardly be
quantified and induced in the financial statements.
bank operate in a very keen competitive environment in fact makes it to be
reluctant in giving out financial and other information due to fear of playing
into their competitors hand.
1.7 DEFINITION OF OPERATIONAL TERMS
Liquidity: This is the availability of
bank to meet sudden withdrawal demand or request for loan by borrowing
Profitability: Is the ability of a bank
to earn positive net return on its investment over a long period of time
Solvency: Is the investment in asset
that will be ready to mature at the time the long them obligations of bank are
due for settlement.
Deposit: This is the money kept with the
bank by customer which is the major source of fund, accounting for over 60% of
what a bank needed to finance its lending operation.
Loan and advances: These are funds
granted to loan seeking customers to meet there demand in which interest will
be paid on it to the bank.
Market risk: This is the possibility
that market will move against an operator in terms of change in interest or
exchange rate and therefore result in either potential loss of income or
utilization of funds below the optimum level.
Cash: This is the fund held by bank to
meet its daily obligation most especially customers withdrawals.
Asset: Asset are owned by bank.
E.A (1998): "The Nigerian Financial System", Economy digest volume
19, page 4
O.A (2004): "Management of Liquidity and profitability the Nigerian
Banker, Vo16, Page 14
Ghosh (2010): "Risk Management and analysis'" Risk management in
Banking, voI1.5, page 15