CAUSES AND EFFECTS OF LIQUIDITY PROBLEM ON THE NIGERIA BANKING INDUSTRY
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
CAUSES AND EFFECTS OF LIQUIDITY PROBLEM ON THE NIGERIA BANKING INDUSTRY
ABSTRACT OF THE CAUSES AND EFFECTS OF THE NIGERIA BANKING INDUSTRY’S LIQUIDITY PROBLEM
This research project is critical for the Nigerian banking industry.
The study project aims to investigate the root causes of liquidity issues in the Nigerian banking sector. This notion identifies reasons that impede bank liquidity as well as measures to address such factors.
Secondary sources of data were extensively utilised by the research in the assessment of related materials by renowned writers and authors to address the research challenge. This greatly aided in obtaining details about the Nigerian banking sector’s liquidity concerns.
Furthermore, because the research is based on five separate chapters, the research has been able to establish her finding adequately the cause of liquidity difficulties such as fraud, loan default/ded debt, and mismanagement, as well as alternative solutions to such problems.
However, recommendations and conclusions were made regarding the causes of liquidity problems in the Nigerian Banking Industry, as well as measures to address such constraints; if properly implemented, the concept of liquidity problems in the Nigerian Baking Industry will be reduced or even eliminated entirely.
INTRODUCTION TO CHAPTER ONE OF THE CAUSES AND EFFECTS OF THE LIQUIDITY PROBLEM ON THE NIGERIA BANKING INDUSTRY
1.1 BACKGROUND OF THE STUDY
A bank’s primary job is to accept deposits and make those funds available to depositors as and when they are needed.
In addition to receiving and making deposits available, banks provide a variety of services that are critical to the smooth operation of the financial system.
Orjih (1980) defines a firm as liquid when it is able to satisfy its debts when they come due. This implies that a firm is said to be experiencing liquidity challenges when it is unable to satisfy its commitments when they fall due.
The issue of liquidity in Nigeria’s banking industry cannot be overstated.
This has been deemed terrible in the past, now, and even in the near future.
Liquidity issues have resulted in the loss of goodwill of many banks, as well as the demise of the majority of banks. Banks such as Society Generals, Allied Bank, Pan-African Bank, Progress Bank, Highland Bank of Nig ltd, and others have gone bankrupt.
As a result, the researcher is inspired to write about this particular topic because of its current detrimental impact on most banks, both those that have survived it and those that are still dealing with it.
1.2 STATEMENT OF THE PROBLEM
Many people are currently criticising banks for transferring funds from one bank to another and changing their bank of transaction to another.
In addition, several banks are dealing with liquidity issues, which prevents them from meeting their obligations on time. Most people have lost faith in particular banks, while some have lost faith in banks in general.
Furthermore, due to a lack of trust and faith in Nigerian banks, some people prefer to keep their cash (liquidity preference), while others want to invest it rather than save it with the bank.
This study focuses on the impact and causes of liquidity issues in the Nigerian banking industry.
1.3 OBJECTIVE OF THE STUDY
The work “the effect of liquidity problems on the Nigerian Banking Industry” was studied. Intentions to accomplish the following goals:
1. Determine the possible reasons of liquidity issues.
2. To investigate the effects of the liquidity crisis on the Nigerian banking industry.
3. Determine the economic impact of the Nigerian Banking Industry’s liquidity crisis.
4. To identify and possibly eliminate the causes of liquidity concerns in the Nigerian banking industry.
1.4 RESEARCH QUESTIONS
The researcher is expected to use the following research question to achieve the given aims.
What are the root causes of your bank’s liquidity issues?
What impact do you believe the liquidity crisis will have on the Nigerian banking industry?
Is there any impact on the economy as a whole from the liquidity crisis?
What are the expected measures or steps that your bank will take in the event of a liquidity crisis?
1.5 SIGNIFICANCE OF THE STUDY
The significance of the paper provides justification for carrying out my research. As a result, banks and other financial organisations will use this research as a reference.
Banks will benefit from this effort since it will show the key and other variables that work against the concept of liquidity, as well as preventative actions.
However, this research will be very useful to the Nigerian banking industry in reducing the level of liquidity problems, bank distress, and collapses.
1.7 DEFINITION OF TERMS
LIQUIDITY: Liquidity refers to a bank’s capacity to meet its existing obligations on time, or to pay a customer’s demand when it is due.
LIQUIDITY PROBLEM: This occurs when the bank is unable to satisfy its present obligations.
BANK DISTRESS: When a bank has a negative net worth and is unable to achieve the bank examination rating or acronym known as CAMEL; that is capital Adequate, Assets quality, Management competency earning capability, and liquidity position.
BAD DEBT: Also known as irrloverable debt, this is debt owed to a creditor but for which complete or partial recovery is deemed impossible due to some inherent weakness.
LIQUIDITY PREFERENCE: The preference of an individual to keep his or her money in cash rather than invest it.
DEPOSIT: A sum or money paid-in or lodged-in by a bank customer into an account that may or may not be his.
Need help with a related project topic or New topic? Send Us Your Topic