THE EFFECT OF LIQUIDITY RISK ON THE PERFORMANCE OF SOME SELECTED QUOTED COMMERCIAL BANKS IN NIGERIA

This project titled ,(The effect of liquidity risk on the performance of some selected quoted commercial banks in Nigeria ” was under taken with the following objectives: to determine the effect of money deposits on Net Operating Profit Margin of selected quoted Commercial Bank in Nigeria, to examine the effect of cash on Net Operating Profit Margin of selected quoted Commercial Banks in Nigeria and to investigate the effect of Liquidity-Gap on Net Operating Profit Margin of some selected quoted Commercial Banks in Nigeria. The research adopted Ex-post Factor research design; this enabled the researcher to gather data from 2010 to 2015 from the sampled banks that is Diamond Bank, Eco Bank and KeyStone Banks. The data gathered was analyzed with Multiple Regressions, F-test at 95% confidence level in addition to Statistical Package for Social Science (SPPS) which was used to test the hypotheses. The result shows that: performance of Commercial Banks in Nigeria is negatively affected due to the Liquidity Gap, the increase in the cost ultimately affect the performance of the bank The researcher therefore, recommended for banks to establish the required cash in each product segment and maintain the optional level which help in reducing the cash balance level and increase their customer deposit base through making the product accessible to more customers especially the low income earners who have been neglected for a long time by the main stream banks. At the same time banks should consider targeting the corporate clients who will be willing to retain large cash in the banks for a longer period.