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        Liquidity is the ability to mobilize cash or convert an into cash with minimum delay and minimum loss. Virtually, all-economic units, including banks needs liquidity, banks must maintain a substantial part of their assets in cash and in assets but can be converted into cash quickly.

        How much liquidity to hold and in what forms to hold it have been line major areas of management decision in meeting their liquidity needs. Banks have wide latitude in asset management and in recent years have begun to use the attraction of liabilities to assist in this task.

        The problem of liquidity for commercial banks is essentially that of having available at all times sufficient funds to meet the demands for money that may be made on them. Banks are required by law to comply with legal reserves requirements and in addition they need liquidity to meet all legitimate loan demands and deposit with drawls liquidity is also needed to take advantage of an expected profit opportunities (Speculative purposes) and for unforeseen contingencies or emergencies liquidity can also be defined as a bank ability, not only to meet possible withdrawals but also to provide for legitimate credit needs of its customers and the community or public. If the liquidity of any bank is property managed, it will keep the business of the bank a float (having enough money to operate or stay out of debt) at all times as finance is the bed rock of every organization of recent, there have been cases of bank failmes, which have been occasioned by the neckless liquidity management on the part of the management of such banks. From the above scenario, it is also clear that an effective and efficient liquidity management can lead to viability and profitability.

        This study had become necessary because the researcher feels that there is no adequate liquidity management in the banking sector. Liquidity forms an essential part of any organization and as such to ensure operating efficiency on any bank, the level of fund (Liquidity) should be kept so that any time there is sufficient fund/cash to meet the customers needs should be determined and set.

        Hence, the management of this fund is of prime importance in the life of any bank. These fialmes of Banks have made bank customers to lose faith/confidence in the banks, we know the banking industry is a very important sector of nay economy. A bank can be said to doing well if it is visible and profitable this can only be made possible. If its liquidity is well managed.


        Many banks have failed due to many reasons. The most apparent of these reason is poor liquidity management tit is obvious that due to the establishment of many banks, throng hands or inefficient and inexperienced managers and staffs have found them selves in the banking industry/sector. The question that bother these researchers is how bank can effectively and efficiently manage their liquidity (fund) for viability and profitability.


        A bank is expected to manage its fund in such a way as to optimize and maximize its profit, maintain adequate liquidity and an acceptable level of risk. Thus, the purpose of this study is to examined the extent to which the first bank of Nigeria plc has managed its liquidity and profitability. This is because if a business or firm is not viable, customers/investors will not be interested or attracted to it and therefore it cannot subsist worst still, if a business is not making profit it will cease to exist or wind-up, that is, stop to operate.

        In looking at the purpose of this study or research work, the researcher will consider the following.

i.      To know the minimum level of liquidity that is required for the average bank.

ii.     To find out if there is any relationship between the concept of Bank Liquidity, viability and profitability.

iii.    To find out the assets and portfolio that run to generate more funds for the banks operations, thereby increasing profit base.  


Adequate Liquidity is a Sne – quarnon of banking and the economy of any nation depends on how effective and efficient the banking sector is.

Liquidity problems tends to surface on the shortarum when there is large increase in the demand for cash. The significance of this research is to give advice (proffer) ways on how banks can efficiently and effectively mange its liquidity and remain in business. If it is not done, the confidence of the customers will erode and there will be panic withdrawals of their deposits and the bank will involves. When customers deposit money with them and cannot get it when they need it.

This also will cause shareholder to begin to sell their shareholding and therefore affecting the profit maximization objective of the bank this will also have unfavourable effect on investment on assets and other portfolios and may not be able to keep afloat and CBN Liquidity and cash requirement. The essence of this work therefore is to look into Liquidity in the bank as a tool for viability and profitability. This research work will be of immense benefit to bank management , potential and existing shareholder of the bank it will also help the customers to be cautions of the deposit with the bank and any other bank, it will also be of great benefit to other research students who may be researching into related area in the further project work, both primary and secondary sources of data collection will be used.


        The hypotheses of this study are thus stated below:

Hypothesis I

i.      Good Liquidity management lead to Liquidity in banks.

ii.     Good Liquidity management does not lead to viability and profitability in banks.

Hypothesis II

i.      Good Liquidity management adds to profitability in the banks.

ii.     Good Liquidity management does not add to profitability in the bank


        This research work is designed to look firstly into Banking industry and how Liquidity of Bank is being managed with particular reference to first bank of Nigeria Plc. This bank operate through network of branches. This research work will however look into Warri main Branch whenever it has been comply with CBN Liquidity requirements and how this may have probably led to the growth, viability and profitability of the bank in the period of 2009-2019.


The main constraints that are likely to affect this project work has actually been in the areas of data collection, finance and the authority to give out information.

As we all know, banks by their peculiar nature consider all its dealing and information as strictly confidential and are very pragmatic to their affair.

The problem of finance is a common problem that bothered us most throughout the project work.

Another constraint is that anticipated is the problem of distance between Ozoro and Warri where First Bank of Nigeria Plc, Warri main Branch is located or in the place of its operation. This result to the fact that most of the time one have to miss out in some of the lectures that are very important. The time to read and to prepare for the final year exams has been spend on this project work which may likely cause neglect in other areas of study.


i.      Bank: These are financial institutions which accepts deposits from the public and in the advances loans by creating credit.

ii.     Liquidity: This is the relative amount of assets in cash which can be quickly converted into cash, available to meet short – term Liquidity.

iii.    Management: This is the act of directing, Planning controlling and organization the work of a company or organization. It is the act of getting things done through others.

iv.    Viability: Encydopedia of social science Vol 19 sees bank viability as the ability of the bank to be able to provide adequate finance for the smooth running of its operation and in meeting it customers withdrawal need and granting of credit facilities.

v.     Assets: It is an item of property which can be given a value in monetary terms. They are economic resources owned by a business or any entity, which are expected to benefit future operations.

vi.    Liability: This is a claim against a business entity which will be settled by the entity parting with assets on in some other way losing an economic benefit. It can be referred to what is business owed to the public outsiders.

vii.   Portfolio: It is a combination of assets securities or projects of an investor at a given point in time.

viii.  Profitability: This refers to the maximum profit or increase in the Bank net assets resulting from its ordinary business activities and well management of Bank Liquidity by manager or management of the bank.

ix.    Investment: This is when a bank uses the excesses cash in its coffers to purchase capital goods, security assets or shares in a firm or business in order to make profit.

x.     Deposits: These are money or funds that customers leave or kept in their accounts, whether these are current account, which are for current money that is not intended to be saved or deposited and which can be withdraw at any time or savings account

xi.    Credit: This is a transaction between two parties in which one (the creditor on lender) supplies money, goods, service on semities in return for a promised future payment of credit dealings.

xii.   Withdrawal: This is when a bank customer take out his/her total deposit in his account with serving withdrawal voucher at a given time in a given bank.

xiii.  Sive-Qua-non: This is something which one must have/posses or exist for something else to be possible.

ixx.  Equity Capital: These are capital contributed to a business enterprise in return for a right to participate in a distribution of profit (either while the enterprise is a going concern or on its wind-up) not limited to any specific amount. It is a capital contributed for equity shares.

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