Abstract:
Liquidity management has always proven to be one of the difficult management
function that business leaders have to deal with in their business operations.
Interestingly, there is no conventional wisdom as to the required threshold of liquidity
a business have to maintain in order to remain sustainable hence, every business entity
will require its own liquidity management policy. The study investigated how
corporate liquidity management affect firm performance using listed financial
institutions on the Ghana Stock Exchange as the study context. Specifically, the
objectives of the study were to investigate the effect of liquidity on performance of
financial institutions, to investigate whether the volume of bank cash has an effect on
bank’s profitability and finally to examine the nature of relationship that exists
between the level of treasury bills and certificates of deposits maintained by the bank
and bank profitability. This study followed the longitudinal study design hence, panel
data and specifically OLS was used for the study data analysis. The total population
for the study, came from all the 33 universal/commercial banks in Ghana. The study
employed purposive sampling hence financial institutions listed on the Ghana Stock
Exchange formed the study sample. The study used seven (7) of the banks
representing 87.50% of the listed banks and dataset from 10 years’ time frame (2006-
2015). Findings from the study showed that the variables that had the significant
impact on the banks ROA were the liquid asset ratio and short term investments. The
study recommended that the managers of these banks should look for more efficient
ways which can ensure that at all times there will be an equitable balance between the
cash the banks hold as against the deposits they keep for their customers since not
having such a balance can affect their brand identity when customer begins to find it
difficult to have access to their deposits.
Description:
A Research Project to the Department of Accounting Education, Faculty of
Business Education, submitted to the School of Graduate Studies, University of
Education, Winneba in partial fulfilment of the requirements for award of the
Master of Business Administration (Finance Option) Degree.
