The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks

Marcus Garvey Orji; Sunday Alewo Omale; Chima Kate; Jeresa Solomon

doi:doi:10.11648/j.ajtab.20160204.12

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The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks

Marcus Garvey Orji, Sunday Alewo Omale, Chima Kate, Jeresa Solomon

Published in American Journal of Theoretical and Applied Business (Volume 2, Issue 4)

Received: 31 October 2016 Accepted: 25 November 2016 Published: 29 December 2016

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Abstract

The main aim of managing cash effectively in banks is geared towards enhancing an optimal balance between liquidity and profitability. This is done through the provision of loans and advances in the investment of excess funds to generate income otherwise known as profit. This research study has the objective of assessing liquidity and profitability as a tool for an effective cash management of Nigerian commercial banks with emphasis on first bank of Nigeria plc. The study is a survey research. Primary and secondary data were applied and formulated hypotheses tested using Chi-square derived from Kendal coefficient of concordance. The findings of the study revealed that that there is a relationship between effective cash management and profitability in Nigerian commercial Banks, There is also a relationship between effective cash management and liquidity in First Bank Plc, that First bank’s technique of cash management reduces risks and First Bank’s staff have adequate training in cash management because management of cash is very important to the bank The study recommends that in order to guide against unforeseen circumstances which would have adverse effect on a bank, Care must be taken in the employment of staff in the treasury department. Therefore qualified professionals would be most appropriate in order to carry out good bargaining, better portfolio measurement which makes proper proposal and hence strike acceptable level of cash.

Published in	American Journal of Theoretical and Applied Business (Volume 2, Issue 4)
DOI	10.11648/j.ajtab.20160204.12
Page(s)	38-45
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Liquidity, Profitability, Effective Cash Management, Nigerian Commercial Banks

References

[1]	Alabi, T. A (2005) “Marketing of banking services in Nigeria” University Press Ilorin.
[2]	Falegan, S. B (2006) “Redesigning Nigeria’s Financial System” University Press PLC, Ibadan.
[3]	Ofuani, J, (2014) Assessment of the influence of new product development on profitability in Nigerian Banks. Unpublished MBA project. Department of business administration, A. B. U, Zaria.
[4]	Ejiogu, O (2012) Assessment of the influence of new product development on profitability in Nigerian Banks. Unpublished MBA project. Department of business administration, A. B. U, Zaria.
[5]	Lemo T. (2006) “Cash Management in Banks” Paper presented at the financial institution training centre” (FITC) Yaba, Lagos
[6]	Abdullahi, A and Aderento, C; (2006) “Comprehensive certificate Economics” University Press PLC. Ibadan.
[7]	Orji, M. G, Akhimien. E, Boman, S. A, Ikegwuiro. P. U (2016) Assessing Brand Equity and Customer Satisfaction as Tools for Profit Optimization in Nigeria’ Science Journal of Business and Management Volume 4, Issue 5, October 2016, Pages: 165-171.
[8]	Dereck, C. H, (2001) “Financial Decision Making concepts, Problems and cases”. Prentice Hall of India, New Delhi.
[9]	www.cbn.ng.org/accessed/18/6/2016
[10]	Wong, S. K. S. and Tong, C. (2012), "The influence of market orientation on new product success", ‘’European Journal of Innovation Management’’, Vol. 15 No. 1, pp. 99 – 121.
[11]	Orji, M. G (2015) Impact of personality factors on consumer buying behavior towards textile materials in South Eastern Nigeria’ Ph.D Thesis, Department of Business Administration, Ahmadu Bello University Zaria, Nigeria.

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APA Style

Marcus Garvey Orji, Sunday Alewo Omale, Chima Kate, Jeresa Solomon. (2016). The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks. American Journal of Theoretical and Applied Business, 2(4), 38-45. https://doi.org/10.11648/j.ajtab.20160204.12

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ACS Style

Marcus Garvey Orji; Sunday Alewo Omale; Chima Kate; Jeresa Solomon. The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks. Am. J. Theor. Appl. Bus. 2016, 2(4), 38-45. doi: 10.11648/j.ajtab.20160204.12

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AMA Style

Marcus Garvey Orji, Sunday Alewo Omale, Chima Kate, Jeresa Solomon. The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks. Am J Theor Appl Bus. 2016;2(4):38-45. doi: 10.11648/j.ajtab.20160204.12

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@article{10.11648/j.ajtab.20160204.12,
  author = {Marcus Garvey Orji and Sunday Alewo Omale and Chima Kate and Jeresa Solomon},
  title = {The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks},
  journal = {American Journal of Theoretical and Applied Business},
  volume = {2},
  number = {4},
  pages = {38-45},
  doi = {10.11648/j.ajtab.20160204.12},
  url = {https://doi.org/10.11648/j.ajtab.20160204.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtab.20160204.12},
  abstract = {The main aim of managing cash effectively in banks is geared towards enhancing an optimal balance between liquidity and profitability. This is done through the provision of loans and advances in the investment of excess funds to generate income otherwise known as profit. This research study has the objective of assessing liquidity and profitability as a tool for an effective cash management of Nigerian commercial banks with emphasis on first bank of Nigeria plc. The study is a survey research. Primary and secondary data were applied and formulated hypotheses tested using Chi-square derived from Kendal coefficient of concordance. The findings of the study revealed that that there is a relationship between effective cash management and profitability in Nigerian commercial Banks, There is also a relationship between effective cash management and liquidity in First Bank Plc, that First bank’s technique of cash management reduces risks and First Bank’s staff have adequate training in cash management because management of cash is very important to the bank The study recommends that in order to guide against unforeseen circumstances which would have adverse effect on a bank, Care must be taken in the employment of staff in the treasury department. Therefore qualified professionals would be most appropriate in order to carry out good bargaining, better portfolio measurement which makes proper proposal and hence strike acceptable level of cash.},
 year = {2016}
}

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TY  - JOUR
T1  - The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks
AU  - Marcus Garvey Orji
AU  - Sunday Alewo Omale
AU  - Chima Kate
AU  - Jeresa Solomon
Y1  - 2016/12/29
PY  - 2016
N1  - https://doi.org/10.11648/j.ajtab.20160204.12
DO  - 10.11648/j.ajtab.20160204.12
T2  - American Journal of Theoretical and Applied Business
JF  - American Journal of Theoretical and Applied Business
JO  - American Journal of Theoretical and Applied Business
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AB  - The main aim of managing cash effectively in banks is geared towards enhancing an optimal balance between liquidity and profitability. This is done through the provision of loans and advances in the investment of excess funds to generate income otherwise known as profit. This research study has the objective of assessing liquidity and profitability as a tool for an effective cash management of Nigerian commercial banks with emphasis on first bank of Nigeria plc. The study is a survey research. Primary and secondary data were applied and formulated hypotheses tested using Chi-square derived from Kendal coefficient of concordance. The findings of the study revealed that that there is a relationship between effective cash management and profitability in Nigerian commercial Banks, There is also a relationship between effective cash management and liquidity in First Bank Plc, that First bank’s technique of cash management reduces risks and First Bank’s staff have adequate training in cash management because management of cash is very important to the bank The study recommends that in order to guide against unforeseen circumstances which would have adverse effect on a bank, Care must be taken in the employment of staff in the treasury department. Therefore qualified professionals would be most appropriate in order to carry out good bargaining, better portfolio measurement which makes proper proposal and hence strike acceptable level of cash.
VL  - 2
IS  - 4
ER  -

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Author Information

Marcus Garvey Orji

Department of Business Administration, Veritas University, Abuja, Nigeria
Sunday Alewo Omale

Department of Business Administration, Veritas University, Abuja, Nigeria
Chima Kate

Department of Entrepreneurial Studies, Veritas University, Abuja, Nigeria
Jeresa Solomon

Department of Business Administration, Veritas University, Abuja, Nigeria

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Plain Text BibTeX RIS

APA Style

Marcus Garvey Orji, Sunday Alewo Omale, Chima Kate, Jeresa Solomon. (2016). The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks. American Journal of Theoretical and Applied Business, 2(4), 38-45. https://doi.org/10.11648/j.ajtab.20160204.12

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ACS Style

Marcus Garvey Orji; Sunday Alewo Omale; Chima Kate; Jeresa Solomon. The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks. Am. J. Theor. Appl. Bus. 2016, 2(4), 38-45. doi: 10.11648/j.ajtab.20160204.12

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AMA Style

Marcus Garvey Orji, Sunday Alewo Omale, Chima Kate, Jeresa Solomon. The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks. Am J Theor Appl Bus. 2016;2(4):38-45. doi: 10.11648/j.ajtab.20160204.12

Copy | Download

@article{10.11648/j.ajtab.20160204.12,
  author = {Marcus Garvey Orji and Sunday Alewo Omale and Chima Kate and Jeresa Solomon},
  title = {The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks},
  journal = {American Journal of Theoretical and Applied Business},
  volume = {2},
  number = {4},
  pages = {38-45},
  doi = {10.11648/j.ajtab.20160204.12},
  url = {https://doi.org/10.11648/j.ajtab.20160204.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtab.20160204.12},
  abstract = {The main aim of managing cash effectively in banks is geared towards enhancing an optimal balance between liquidity and profitability. This is done through the provision of loans and advances in the investment of excess funds to generate income otherwise known as profit. This research study has the objective of assessing liquidity and profitability as a tool for an effective cash management of Nigerian commercial banks with emphasis on first bank of Nigeria plc. The study is a survey research. Primary and secondary data were applied and formulated hypotheses tested using Chi-square derived from Kendal coefficient of concordance. The findings of the study revealed that that there is a relationship between effective cash management and profitability in Nigerian commercial Banks, There is also a relationship between effective cash management and liquidity in First Bank Plc, that First bank’s technique of cash management reduces risks and First Bank’s staff have adequate training in cash management because management of cash is very important to the bank The study recommends that in order to guide against unforeseen circumstances which would have adverse effect on a bank, Care must be taken in the employment of staff in the treasury department. Therefore qualified professionals would be most appropriate in order to carry out good bargaining, better portfolio measurement which makes proper proposal and hence strike acceptable level of cash.},
 year = {2016}
}

Copy | Download

TY  - JOUR
T1  - The Role of Liquidity and Profitability as a Tool for Effective Cash Management in Nigerian Commercial Banks
AU  - Marcus Garvey Orji
AU  - Sunday Alewo Omale
AU  - Chima Kate
AU  - Jeresa Solomon
Y1  - 2016/12/29
PY  - 2016
N1  - https://doi.org/10.11648/j.ajtab.20160204.12
DO  - 10.11648/j.ajtab.20160204.12
T2  - American Journal of Theoretical and Applied Business
JF  - American Journal of Theoretical and Applied Business
JO  - American Journal of Theoretical and Applied Business
SP  - 38
EP  - 45
PB  - Science Publishing Group
SN  - 2469-7842
UR  - https://doi.org/10.11648/j.ajtab.20160204.12
AB  - The main aim of managing cash effectively in banks is geared towards enhancing an optimal balance between liquidity and profitability. This is done through the provision of loans and advances in the investment of excess funds to generate income otherwise known as profit. This research study has the objective of assessing liquidity and profitability as a tool for an effective cash management of Nigerian commercial banks with emphasis on first bank of Nigeria plc. The study is a survey research. Primary and secondary data were applied and formulated hypotheses tested using Chi-square derived from Kendal coefficient of concordance. The findings of the study revealed that that there is a relationship between effective cash management and profitability in Nigerian commercial Banks, There is also a relationship between effective cash management and liquidity in First Bank Plc, that First bank’s technique of cash management reduces risks and First Bank’s staff have adequate training in cash management because management of cash is very important to the bank The study recommends that in order to guide against unforeseen circumstances which would have adverse effect on a bank, Care must be taken in the employment of staff in the treasury department. Therefore qualified professionals would be most appropriate in order to carry out good bargaining, better portfolio measurement which makes proper proposal and hence strike acceptable level of cash.
VL  - 2
IS  - 4
ER  -

Copy | Download