ABSTRACT

The study empirically emphasized the impact of liquidity management on commercial banks profitability in Nigeria using time series data from 1996 to 2015. The dataset sourced from Central Bank of Nigeria Statistical Bulletin was analyzed using multiple regression analysis. The results of the analysis revealed that bank cash assets and treasury bills rate has a negative and significant impact on commercial banks profitability (proxied by return on assets). Also, treasury bills rate was found to have a negative and significant impact on commercial banks profitability. On the other hand, cash reserve to asset ratio was positive and insignificant, while liquidity ratio was positive and insignificant. Based on the findings an efficient management of bank liquidity would not only inure to the benefit of banks but also to individuals and business entities and thus the whole economy at large.

TABLE OF CONTENTS

Title i

Declaration ii

Certification iii

Dedication iv

Acknowledgments v

Table of contents vi

List of Tables vii

Abstract

CHAPTER ONE

INTRODUCTION 1

1.1 Background to the Study 1

1.2 Statement of the Problem 4

1.3 Objectives of the Study 5

1.4 Research Questions 6

1.5 Research Hypotheses 6

1.6 Significance of the Study 7

1.7 Scope of the Study 8

CHAPTER TWO

REVIEW OF RELATED LITERATURE 10

2.1 Conceptual Framework 10

2.1.1 Concept of Liquidity 14

2.1.2 The Concept of Profitability in Banks 15

2.1.3 Measurement of Liquidity in Commercial Banking 17

2.1.4 Relevance of Liquidity and Profitability to Nigerian Banks 21

2.2 Theoretical Review 22

2.2.1 Anticipated Income Theory 22

2.2.2 Shiftability Theory 22

2.2.3 Liquidity Preference Theory 23 

2.2.3 Commercial Loan Theory 24

2.3 Empirical of Related Empirical Literature 25

CHAPTER THREE

RESEARCH METHODOLOGY 32

3.1 Research Design 32

3.2 Area of the Study 32

3.3 Data Collection 33

3.4 Method of Data Analysis 33

3.4.1 Model Specification 34

3.5 Description of the Variables 35

3.7 Decision rule 37

CHAPTER FOUR

PRESENTATION OF DATA, ANALYSIS AND DISCUSSIONS

4.1 Presentation of Data 38

4.2 Results, Interpretations and Hypotheses Testing 38

4.2.1 Descriptive Analysis 39

4.2.2 Regression Analysis 40

4.2.3 Discussion of Results and Test of Hypotheses 41

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings 43

5.2 Conclusion 43

5.3 Recommendations 44

REFERENCES 46

APPENDIX Descriptive Statistics & Regression Analysis 51