Reference code: c045
ABSTRACT
The study examined the extent to which Central Bank of Nigeria’s Liquidity Management efforts impacts on Deposit Money Banks’ Performance in Nigeria. The study covered the period 2005-2013 and contained a sample of 10 DMBs currently operating in Nigeria. While DMBs cash balances held with the CBN was specified dependent variable measuring CBN liquidity management efforts, Return on Assets, Assets quality and current ratio were specified as proxies for bank performance. The researcher estimated the specified model using the ordinary least squares method applied on the panel data collected from the various issues of annual report of the ten deposit money banks used in the study. The results garnered from the data analyses indicated among other things that: A positive relationship existed between cash balances with the Central Bank of Nigeria return on asset of the banks. The implies that as bank return on asset increases, this invariably leads to increase in the bank’s cash balances with the central bank of Nigeria. Our findings also showed that a negative relationship between cash balances with central bank and current ratio (liquidity ratio) of banks. This finding does seem to support the scenario of balances with the central bank improving the liquidity position of the individual banks concerned. Finally, a negative relationship was recorded between cash and balances with the central bank of Nigeria and the asset quality (risk assets) of the banks. The implication of this finding is that as cash balances held with the central bank increases, DMBs risk assets is expected to decrease and vice versa. This seems to be quite logical since an increase in balances with the central bank is expected to help reduce the toxicity in the banks, loan and advances portfolio. On the basis of the findings, the following recommendations were made: The use of balances with the CBN as a liquidity management tool be supported with more responsive or stringent measures. Since cash balances yield very little income for the banks, some of the cash balances be substituted into very short term securities still held with the CBN in place of cash. Secondly, there is need for the Central Bank to intensively fund research into the common phenomenon of key policy/regulatory measures not having the desired effect. Finally, competence should be given credence in considering people for management jobs. This is because management quality is the driving force of DMBs performance.
Liquidity management therefore involves the strategic supply or withdrawal from the market or circulation the amount of liquidity consistent with a desired level of short- term reserve money without distorting the profit making ability and operations of the bank. it relies on the daily, assessment of the liquidity conditions in the banking system, so as to determine its liquidity needs and thus the volume of liquidity to allot or withdraw from the market.
The liquidity needs of the banking system are usually defined by the sum of reserve requirements imposed on banks by a monetary authority (CBN 2012). To guide Bank’s management on the expected level of liquidity in the system over a period of time, liquidity management which involves the planning and control of cash and other liquid assets, may be supported by daily liquidity forecasting by the central bank so that appropriate measures are taken to prevent undesirable market developments that that may negatively impact on the objective of price stability.
Bhattacharyya and Sahoo (2011), argued that liquidity management by central banks typically refers to the framework, set of instruments, and the rules that the monetary authority follows in managing systemic liquidity, consistent with the ultimate goals of monetary policy. In this regard, central banks modulate liquidity conditions by varying both the level of short – term interest rates and influencing the supply of bank reserves in the interbank market. While central bank liquidity management has short term effects in financial markets, its long – term implications for the real sector and on price level are more profound.
Effective liquidity management is a key factor that helps sustain bank profits and concurrently keeps the banking institution and the financial system generally from illiquidity and perhaps, insolvency. Strategic bank management aims prominently at keeping the bank solvent and liquid in order to earn good profits and remain sound. In order to maintain public confidence in the financial system of the country, banks are required to maintain adequate amount of cash and near cash assets such as securities to meet withdrawal obligations. ...............
INTRODUCTION
............... Bank Liquidity Simply means the ability of the bank to maintain sufficient funds to pay for its maturing obligations. it is the bank’s ability to immediately meet cash, cheques, other withdrawals obligations and legitimate new loan demand while abiding by existing reserve requirements.Liquidity management therefore involves the strategic supply or withdrawal from the market or circulation the amount of liquidity consistent with a desired level of short- term reserve money without distorting the profit making ability and operations of the bank. it relies on the daily, assessment of the liquidity conditions in the banking system, so as to determine its liquidity needs and thus the volume of liquidity to allot or withdraw from the market.
The liquidity needs of the banking system are usually defined by the sum of reserve requirements imposed on banks by a monetary authority (CBN 2012). To guide Bank’s management on the expected level of liquidity in the system over a period of time, liquidity management which involves the planning and control of cash and other liquid assets, may be supported by daily liquidity forecasting by the central bank so that appropriate measures are taken to prevent undesirable market developments that that may negatively impact on the objective of price stability.
Bhattacharyya and Sahoo (2011), argued that liquidity management by central banks typically refers to the framework, set of instruments, and the rules that the monetary authority follows in managing systemic liquidity, consistent with the ultimate goals of monetary policy. In this regard, central banks modulate liquidity conditions by varying both the level of short – term interest rates and influencing the supply of bank reserves in the interbank market. While central bank liquidity management has short term effects in financial markets, its long – term implications for the real sector and on price level are more profound.
Effective liquidity management is a key factor that helps sustain bank profits and concurrently keeps the banking institution and the financial system generally from illiquidity and perhaps, insolvency. Strategic bank management aims prominently at keeping the bank solvent and liquid in order to earn good profits and remain sound. In order to maintain public confidence in the financial system of the country, banks are required to maintain adequate amount of cash and near cash assets such as securities to meet withdrawal obligations. ...............
FOR ACCESS TO THE FULL PROJECT WORK, USE THE ORDER NOW! BUTTON BELOW
INTRODUCTION
1.1 Background to the Study
1.2 Statement of the problem
1.4 Objectives of the Study
1.4 Research Questions
1.5 Hypotheses
1.6 Significance of the study
1.8 Scope of the Study/Limitations
1.8 Organization of the Study
1.10 Definitions of Terms
CHAPTER TWO
LITERATURE REVIEW
2.1 Conceptual Framework
2.1.2 Definitions of Liquidity
2.1.2 Theoretical Framework.
2.1.3 Recent global trends on the liquidity position of banks
2.1.4 Liquidity Management
2.1.5 Sources of Liquidity
2.1.6 Liquidity Components
2.1.7 Bank Liquidity Theories
2.1.8 Liquidity Measures
2.1.9 Banking System Liquidity Management in Nigeria
2.1.10 The Process of Liquidity Management
2.1.11 Objectives of Liquidity Management
¬2.1.12 The Institutional Process of Liquidity Management
2.1.13 The Secondary Market
2.1.14 Process of Liquidity Management
2.1.15 The Institutional Arrangements
2.1.16 Trends in Banking Sector Liquidity and Regulation in Nigeria
2.1.17 Liquidity Management Regimes in Nigeria
2.1.18 Challenges of Liquidity Management in Nigeria
2.1.19 Way Out of Liquidity Crises
2.1.20 Bank Management Performance Tools (BMPTs)
2.1.22 Bank Performance Measuring Tools
2.1.22 Inadequacies of BMPTs
2.1.23 Bank Performance Measures
2.2 Empirical Review
CHAPTER THREE
METHODOLOGY
3.1 Research Design
3.2 Population for the Study
3.3 Nature/Sources of Data
3.4 Method of Data Analysis
3.5 Model Specification
CHAPTER FOUR
RESULTS AND DISCUSSIONS
4.1 PRESENTATION OF DATA
4.2 DATA ANALYSES
4.2.1 HYPOTHESES TESTING
HYPOTHESIS ONE
HYPOTHESIS TWO
HYPOTHESIS THREE
4.3 DISCUSSION OF FINDINGS
CHAPTER FIVE
SUMMARY CONCLUSIONS AND RECOMMENDATIONS
5.1 SUMMARY
5.2 CONCLUSIONS
5.3 RECOMMENDATIONS
BIBLIOGRAPHY
APPENDICES
101 Pages
Reference code: c045
Reference code: c045
Does the work meet your requirements?
No comments:
Post a Comment