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
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.
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
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
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
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
This research work is contained with the affect and causes of
liquidity problem in Nigerian Banks Industry.
1.3 OBJECTIVE OF THE
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
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.
1.4 RESEARCH QUESTIONS
In order to attain the afforestated objectives the researcher is
expected to employ the following research question.
· What are the causes of liquidity problem in your
· What impact do you think liquidity problem has
on the Nigerian Banking Industry?
· Does liquidity problem has any effect on the
economy at large?
· What are the likely measures or necessary steps
taken by your bank in times of liquidity problem?
OF THE STUDY
The significance of the study establishes the justification for
carrying out my study. Therefore, banks and other numerous financial
institutions will have this research work an item of reference.
Banks will benefit from this work as it will reveal to them the
major and other factors that militate against the concept of liquidity, as well
as its measures to be prevented.
However, this research work will be of great significance to the
Nigerian Banking Industry and curtail the extent of liquidity problems, bank
distress as well as failures.
1.7 DEFINITION OF
entails the ability of the bank to meet promptly its current obligation, or
ability of the bank to meet the customers demand as and when due.
PROBLEM: This arisen where the bank can not be able
to meet up with its current obligations.
DISTRESS: This implies failure that is when a bank
has a negative net worth and can no longer meet up with bank examination rating
or acronym known as CAMEL; that is capital Adequate, Assets quality, Management
competency earning capacity and liquidity position.
DEBT: This can also be called irrloverable debt,
which means debt due to creditor but which for some inherent weakness the full
or partial recovery is considered not possible.
PREFERENCE: This means the idea of an individual
holding his/her money as cash with him/her instead of investing it.
is use to refer to the fund or money paid-in or lodged-in by a bank customer
into an account which may be his or not.
TERMS AND CONDITIONS APPLY
For more informations on project materials and more