Dissertation On Liquidity Management

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THE EFFECT OF LIQUIDITY RISK MANAGEMENT STRATEGY AND THE FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN CAMEROON

CASE STUDY: AFRILAND FIRST BANK (CCEI), YAOUNDE

By NFOR-BUDI YEMNGANG | Department of Business and Management Studies | Accounting and Finance

ABSTRACT

Liquidity risk is considered as one of the serious concern and challenges for the modern era banks. A bank having good asset quality, strong earnings and sufficient capital may fail if it is not maintaining adequate liquidity. Consequently, the research sought to establish the relationship between liquidity risk and financial performance of commercial banks in Cameroon with Afriland First Bank as the case under study. The study adopted correlation research design where data was retrieved from the financial statements i.e balance sheets, income statements and notes of Afriland First Bank during 2003-2013. Multiple regressions were applied to assess the impact of liquidity risk on the bank’s profitability. The findings of the study were that profitability of Afriland is negatively affected due to increase in cash and leverage. The level of customer deposit was also found to positively affect the bank’s profitability and it will therefore be encouraged for banks in the country to widen their coverage by opening more branches in the country. The period studied in this thesis is 2003-2013, due to availability of the data. Only profitability was considered in the study and there is need to consider other variables such as the economic condition prevailing in a given period.

Key Words. Liquidity risk, Performance, Leverage, Cash, Profit before tax, Non-performing loans   Download

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