ENEMS MICROSYSTEMS RESEARCH SPOT: March 02

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Thursday 2 March 2023

THE EFFECT OF LIQUIDITY MANAGEMENT ON THE PROFITABILITY OF COMMERCIAL BANKS IN NIGERIA

THE EFFECT OF LIQUIDITY MANAGEMENT ON THE PROFITABILITY OF COMMERCIAL BANKS IN NIGERIA

(A case study of selected banks in Nigeria)

ABSTRACT

This work investigated the effect of liquidity on the profitability of bank in Nigeria. The work is necessitated by the need to find solution to liquidity management problems in Nigerian banking industry. Three banks were randomly selected to represent the entire banking industry in Nigeria. The proxies for liquidity management include cash and short term fund, bank balances and treasury bills and certificates, while profit after tax was the proxy for profitability. Elliot Rothenberg Stock (ERS) stationary test model was used to test the run association of the variables under study while regression analysis was used to test the hypothesis. The result of this study has shown that liquidity management is indeed a crucial problem in the Nigerian banking industry. The study therefore recommends that banks should engage competent and qualified personnel in order to ensure that right decision are adopted especially with the optimal level of liquidity and still maximize profit.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

In every system, there are major components that are very important for the survival of the system. This is also applicable to the financial system. The financial institution have contributed immensely to the growth of the entire financial system, as they offer an efficient institutional method through which resources can be mobilized and directed from less productive uses to more productive uses.

In performing these financial role, the financial institutions has proved to be an effective link between savers and borrowers, among the financial institutions that have partake in these important financial role are the commercial banks. The functions of the commercial banks have become the strong base for the two major functions of the commercial banks namely deposit mobilization and credit extension. Commercial banks have become a very important institution in the financial system as it helps in facilitating the movement of financial assets that are less desirable to the more desirable public who needed the financial assets. In view of this role and activities commercial banks play in the society, the commercial bank is selected as the main focus of this study.

An adequate financial intermediation requires the attention and focus of the bank management to the profitability and liquidity, which are the two conflicting objectives of the commercial banks. These objectives are parallel in the sense that an attempt for a bank to achieve higher profitability will gradually destroy its liquidity and solvency position and vice versa. Practically, profitability and liquidity are effective indicator of the corporate wealth and performance of not only commercial bank but to all profit oriented venture. These performance indicators are very important to the shareholders and depositors who are major publics of a bank. As the shareholders expect the bank to increase lending in order to give them maximum return in money invested while the depositor expect the bank to keep much idle cash in order to meet their demand. With profitability objective conflicting with that of liquidity, and with the interest of the shareholders conflicting with that of the depositors, there is the need for reconcile and harmonize these conflicting positions through effective liquidity management so as to ensure the survival and growth of the commercial banks.

1.2 Statement of Problem

Through these financial roles, the commercial banks use the idle funds borrowed from the lenders by investing such funds in other classes of financial assets investment. These business activities of the bank is not done without problem facing it, since these deposit which have been invested by the banks for profit maximization can be demanded for at any time. When the bank is not able to meet their financial obligations, the public begins to lose confidence and these will cause lot of competition to the financial sector. With the high increase of competition in the banking industry, every commercial bank should strive to operate on profit and at the same time meet the financial demand of its depositors by maintaining adequate liquidity. The problem then becomes how to select the optimum point at which commercial bank can maintain its assets in order to optimize these two objectives. These problems become more difficult as a large number of banks are basically engaged with profit maximization and tend to neglect the importance of liquidity management and these can lead to technical and legal insolvency.

This research work will also see to other problems such as the effect of excess liquidity and the problem of estimating the proportion of the deposits that can be demanded for at any specific time, selection of factors that will affect or influence the bank liquidity level and finally problem of satisfying the two major publics of the commercial bank simultaneously. With these solutions will be prescribe and recommendations will be made where necessary.

1.3 Objectives of the Study

The main objective of this study is to examine the effect of liquidity management on the profitability of commercial banks in Nigeria.

To examine the effect of bank cash asset on profitability.
To examine the effect of bank balance on profitability.
To examine the effect of Treasury bill and certificate on profitability.

1.4 Research Questions

The following research questions are given consideration in this work:

Does bank asset have any significant effect on profitability?
How can bank balance have effect on profitability?
What will be the effect of Treasury bill and certificate on profitability?

1.5 Statement of Hypothesis

From the statement of problem, objective of study and research questions of the study, the following hypotheses are formulated:

H_OI: There is no significant relationship between bank cash asset on profitability.

H_O2: There is a significant relationship between bank cash asset on profitability.

H_O3: There is no significant relationship between Treasury bill and certificate on profitability.

1.6 Significance of the Study

For the fact that commercial banks operate on liquidity and profitability motives in the mind to satisfy their major publics, the shareholder and depositor, the need arise for them to bring into agreement these two public concurrently. With this, the commercial bank need effective and efficient liquidity management approaches and principles that will help them realize these motives. The result gotten from this study will reveal the level of attachment of the commercial banks to the monetary policies (Liquidity ratios) established by the government and these will help the government to set appropriate liquidity ratios and cash ratios that will not be harmful to the operation and survival of the commercial banks. It will also help banks operations and credit policy guideline which affect profitability level and finally minimize the effect of liquidity and help in providing effective liquidity formulations.

1.7 Scope of Study

This study examines the effect of liquidity management on commercial bank profitability. The variables used are liquidity management which was the proxies is bank cash asset, bank balance and treasury bill and certificates. Profitability which is the second variables was proxied by profit after tax.

1.8 Definition of Term

Liquidity: Ability with which asset can be easily converted into cash. It also determines a firm ability to meet its short-term obligation.
Liquidity management: The planning and control necessary to ensure that organization maintain liquid assets so as to meet its obligations to customers.
Profitability: Profit is the ultimate measure of overall performance that is the excess of income over cost.
Commercial bank: The business of receiving money from outside sources as deposits, irrespective of payment of interest and granting of money loan and acceptance of credit or purchase and sales of securities for the account of others or incurring of obligations to acquire claims in respect of loans prior to maturity.

The Role Of Mass Media In Educational Development In Nigeria

The Role Of Mass Media In Educational Development In Nigeria (A Case Study Of NTA Enugu)

ABSTRACT

This examine the role of mass medial in educational development in Nigeria. The background centre on the role of mass medial in educational development in Nigeria finding out whether television plays an effective role in formal education. The researcher has attempted to carry out series of analysis and study to confirm that the NTA programme-“Science for schools” actually perform its educational role. This study confirms that the programme actually projects the educational contribution of this all important television programme, which is admired and enjoyed by most secondary school students inspite of their different handicaps.

CHAPTER ONE

INTRODUCTION

Mass medial has assumed a very important position in the educational development in Nigeria. This accounts for the introduction of the universal free primary Education-UPE in 1996 and the establishment of new primary, secondary and post secondary school over the country.

The word-Education could be defined in various ways. In a very broad sense, education could be defined to include every agency which enables an individual to master his physical and social environment of which he is a member, it could be defined as an act of teaching, bringing up, instructing or enlightening.

For the purpose of this study, education will be defined as an organisaed and formal instruction which is given in educational establishments such as schools, colleges and universities.

Education has an important role to play in the economy of a nation. The most important economic function of education is that of ensuring that the nation’s need for a labour force is satisfied. Nigeria-a modern industrializing society-news, not just a great deal of man-power, but good quality manpower, the quality and quantity manpower to a large extent controlled by the educational system.

Education also has a political role to play in the Nigeria society.

The stability of any autonomous political unit depends upon two criteria consensus of opinion.

About the assumption underlying. The system, and the ability of the system to provide leaders from within itself in both cases, education has an important role to play.

However, formal education in Nigeria is no longer confined to educational establishment only. The mass media have, in recent times, taken a bold and positive step towards enhancing educational development in the country. An example is the Enugu Television station (ETV) University of the Air.

Mass media-Communication comprises the institutions and technique by which specialized groups employ technological devices, that is the press, Television, Radio, Films, theat disseminate information to large heterogenenous and widely dispersed audience.

This study is particularly concerned with Television and its contribution to educational advancement in the country.

1.1 THE BACKGROUND OF THE STUDY

Educational broadcasting/Television-WNBC/TV Ibandan in 1964.

Later in the same year, educational broadcasting spread to Kaduna, the seat of the Northern states.

In 1965 the Eastern Nigeria Broadcasting Service (Television-EWBC/TV-Started what looked like educational broadcasting with the help of the Eastern Nigeria Ministry of Education, but the programming then was mainly informed, comprising what Elihu Katz and George Wedell might describe as extensive Educations.

A typical Enbc/tu programme in this category was the “Tortoise club a programme for very young children.

This type of programming continued until the out-break of the Nigerian civil war in 1966, at the restoration of pea;e om 1970, Television stations did not function until 1972.

Later in 1973, NTA, Lagos revived its educational programme by introducing some foreign films on science. This programme was meant for children between the ages of ten and fifteen.

It was at this point that the idea of schools broadcast in science came up and was introduced in many of the Nigeria Television Stations in the country.

NTA channel 8, Enugu was one of the television stations that introduced schools broadcast in science in its programme schedule.

So in 1996, the station started a formal educational programme which they called “Science for schools” This programme was then ministry of Education Headquaters, Enugu. Later, the co-operation shifted from the ministry to the principal education officers, Mrs F. Nwakoby.

The format for the production of the programme was mainly provided by the center. But in the early part of 1977, the educational department of NTA channel 8 became autonomous with a graduate in science heading it.

And from then the format for the production of the programme became the responsibility of the department.

The programme is made up of lectures in chemistry and biology. It is broadcast on Mondays at 5.30 pm and lasts for thirty minutes. The production is serial, one subject matter leading to the development of another the scheme is drawn along side the school certificate syllabus in chemistry and biology. It has, as large audience, students in class three, four and five in secondary school who are offering chemistry and Biology the school certificate examination.

RESEARCH PROBLEM

According to the programme producers, the programme “Science for schools” is designed.

To enhance the teaching of science in higher schools. The students, through this formal educational programme, are encouraged to develop greater interest in science subjects that produces a gateway to higher hopes towards technological advancement in Nigeria.
To compliment and supplement classroom education.
To broaden and deepen knowledge in science
To encourage intellectual development structure.
To provide tutorial on curriculum subjects

In is noteworthy that apart from “Science for schools” produced for lower secondary schools students. It is broadcast on Tuesdays at 5.00pm and lasts for thirty minutes.

“Teaching Igbo” for primary schools pupils. This is aired on the days at 5.30pm and lasts for thirty minutes:- schools challenge” for secondary school. Students broadcasting on Wednesdays at 5.30pm and lasts for thirty minutes.

But this study concentrates on “Science for schools” and is designed to determine whether this programme has achieved the aims and objectives for which it was established. It is aimed at finding out whether the television is playing an effective role in formal education.

In studying “Science for schools” the researcher intends to find out, scienctifically whether the students who are the promme target audience are conversant with the programme and whether they are gaining anything from it.

1.3 OBJECTIVES OF THE STUDY

To enlighten the educational systems in Nigerian through the mass media.
To make the students know the value of television.
To actualize the claim that day students have more access to television than boarders.
To know the total number of people that has access to television sets.

1.4 SIGNIFICANCE OF THE STUDY

To show that mass media has gone along way to enhance or facilitate education in Nigeria.
To show that television viewing Nigeria has multiplied ant at greater number of people has access to it.
To enlighten the masses on the educative aspect of the television and to allow them air their views through feed back.

RESEARCH QUESTIONS
Does media in any sense contribute to the enhancement of the societal academic pursuit.
Have the country discovered the uniqueness of media in the encouragement of education in the society.
Can watching television improve the knowledge of the people in the society?
Does mass media help to enlighten the students in their education.

HYPOTHESES

Hi: Media contributes to the enhancement of society.

Ho: Medial does not contribute to enhancement of society.

H2: The country has discovered the uniqueness of media in the encouragement of education in the society.

Ho: The country has not discovered the uniqueness of media in the encouragement of education in the society.

H₃: Watching television improves the knowledge of the people in the society.

Ho: Watching television does not improve the knowledge of the society.

H4: mass media does not help to enlighten the students in their education.

Ho: mass media does not help to enlighten the students in their education.

CONCEPTUAL AND OPERATIONAL DEFINITIONS

1. TELEVISION: As it is used in this study means an instrument used in the dissemination of information making use of audio visuals and intended to reach larger heterogeneous and widely dispersed audience.

2. BROADCASTING: This is an act of dissemination information to widely dispersed audience.

3. POPULARITY: As used in this work, popularity means to be known, pleasing and useful to the target audience.

ASSUMPTIONS

The use of mass media in educational development in Nigeria has contributed a lot in the widening of the peoples knowledge in the society and also the scope of mass media in the society, media equipment are things like the television, radio and other electronic sets which are meant to give out in formation objectively through their effective usage to educate the poor masses.

Television as the study is used as the center points have numerous realities in its contribution to the educational advancement in the society.

More useful information is dismissed through the Television sets. It has equally gone to the extent of entertaining the students and keeping them abstract in the happenings around the society.

LIMITATIONS OF THE STUDY

The major problem encountered in writing this is lack of time in the sense that we have a lot of works at hand i.e (school activities) and because it involved through research work, it was done the way it should have been done.

Another problem is that there is no co-operation among the groups in the sense that out of ten students only two will be serious and this will also bring about reluctance.

The last is money, which is the root of everything, and also the students do complain of lack of money and this brought about education in the society.