The Causes And Effects Of Liquidity Problem On The Nigeria Banking Industry

THE CAUSES AND EFFECTS OF LIQUIDITY PROBLEM ON THE NIGERIA BANKING INDUSTRY

ABSTRACT

This research project is a very crucial study for the Nigeria Banking Industry. The research work is aimed at identifying the causes of liquidity problems in the Nigerian Banking Sector. By this concept, factors militating against Bank liquidity as well as measure to remedy such factors are also identified.

To solve the research problem secondary source of data was extensively used by the research that in the review of related materials by prominent writers and authors. This helped immensely to obtain facts on the issues relating to liquidity problem in the Nigerian Banking sector.

Furthermore, the research work is established on five different chapters, therefore the research in been able to establish her finding appropriately the cause of liquidity problems such as fraud, loan default/ded debt and mismanagement as well as possible measures to solve such problems.

However, recommendation and conclusion were made in respect to the causes of liquidity problems in Nigerian Banking Industry as well as measure to solve such constraints, if properly employed, the concept of liquidity problem in Nigerian Baking Industry will be curtailed or even be eradicated entirely.

TABLE OF CONTENT

TITLE PAGE                                                                                      i

APPROVAL PAGE                                                                             ii

DEDICATION                                                                                     iii

ACKNOWLEDGEMENT                                                                    v

ABSTRACT                                                                                          vi

TABLE OF CONTENT                                                                         vii

1.0 CHAPTER ONE INTRODUCTION

1.1 BACKGROUND OF THE STUDY

1.2 STATEMENT OF THE STUDY

1.3 OBJECTIVE OF THE STUDY

1.4 RESEARCH QUESTIONS

1.5 SIGNIFICANCE OF THE STUDY

1.6 LIMITATION OF THE STUDY

1.7 DEFINITION OF TERMS.

2.0 CHAPTER TWO REVIEW OF RELATED LITERATURE

2.1 THE CONCEPT OF LIQUIDITY PROBLEM

2.2. CAUSES OF LIQUIDITY PROBLEM

2.3 BANK FRAUD AND LIQUIDITY PROBLEM

2.4 LOAN DEFAULT /BAD DEBT AND LIQUIDITY PROBLEM

2.5 LIQUIDITY RATIOS AND BANK PERFORMANCE

2.6 THE SIGNIFICANCE OF LIQUIDITY RATION

3.0 CHAPTER THREE RESEARCH DESIGN AND METHODOLOGY

3.1 SOURCES OF DATA

3.2 LOCATION OF DATA

3.3 ANALYSIS OF DATA

3.4 RESEARCH POPULATION

CHAPTER FOUR SUMMARY OF FINDINGS

CHAPTER FIVE RECOMMENDATIONS AND CONCLUSION

5.1 RECOMMENDATION

5.2 CONCLUSION

BIBLIOGRAPHY.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Basically, a bank has a two-fold function to receive deposits and to make such fund available as and when demanded by the depositors.

In connection with receiving deposits and making it available, there are many service that banks render which are fundamental important to the normal functioning.

According to Orjih (1980) a firm is said to be liquid when it is able to meet its obligations they become due. This by implication entails that a firm is said to be facing liquidity problems, when it cannot be able to meet its obligations as they become due.

The issue of liquidity problem in the Nigerian Banking Industry can not be over emphasized.

This has been considered disastrous in the past present and even in the anticipating future.

Liquidity problems has resulted to the loss of Goodwill of many banks distress as well as failure of most banks.  Banks like society Generals, Allied Bank, Pan-African Bank, Progress Bank, Highland Bank of Nig ltd, etc are not an existence have faced distressed.

Hence, the researcher is motivated to write on this particular problem because of its present negative effect to most banks who though survive it, an well as those who are still being confronted by such problem.

1.2    STATEMENT OF THE STUDY

Presently, a lot of banks are being criticized by many individuals, people moving their funds from one bank to the other, people changing their bank of transaction to another.

Also so many banks are faced with the concept of liquidity problem, there by not being able to meet their obligations as and when due. Most individuals loss confidence on some banks while some do not have confidence on bank in general.

Furthermore, some categories of persons prefer holding their cash (liquidity preference) while some prefer investing it rather than saving such fund with the bank as a result of lack of trust and confidence on Nigerian Banks.

This research work is contained with the affect and causes of liquidity problem in Nigerian Banks Industry.

1.3    OBJECTIVE OF THE STUDY 

The study of the work,” the effect of liquidity problem on the Nigerian Banking Industry. Intends to achieve the following objectives:

1. To find out the possible causes of liquidity problems.

2. To examine the effects of liquidity problem on the Nigerian Banking Industry.

3. To find out impact of liquidity problem on the Nigerian Banking Industry on the economy.

4. To identify way of contending with or possibly eradicating the causes liquidity problems on the Nigerian Banking sector.