AN ASSESSMENT OF LIQUIDITY AND PROFITABILITY MANAGEMENT IN COMMERCIAL BANKS

CHAPTER ONE
1.0 INTRODUCTION
A commercial bank is an economic unit whose main goals is to maximize profit.
Every bank attempts to structure it’s assets and liabilities in such a manner as to yield the highest return subject to some constraints.

when customers deposit money with a bank, they are lending fund to the bank for a specific or indefinite period depending on the contract signed with the bank.
The customer can withdraw funds at short notice or without notice depending on the type of deposit account being operated.

Banks however know from experience that an average depositor will demand a small proportion of the fund deposited by them at anytime.
The bulk of the profit made by the bank arises from simple transaction i.e. the difference between the cost of funds deposited by customers and the changes the cost of fund deposited by customers and the charges on loan to customers.

Generally, depositors are paid lower rate of interest when compared with rate charged on loans, in addition, banks also invest their surplus funds in short, medium and long term securities.

What makes the task of asset selection difficult is the need to balance profitability liquidity and risks.
Though, in developed countries banks have several years successfully applied management science techniques to asset and liability management.

1.1 STATEMENT OF THE PROBLEM
What is the factor influencing organizational policy in Nigeria banks?
How can organizational policy be achieved in Nigerian Banks?
What is the cause of communication gap between staff and management of Nigeria banks?
What are factors that affects level of profit in Nigeria banks?
Why do bank management usually report to retrenchments?

1.2 OBJECTIVE OF THE STUDY
Because of the great importance of the subject matter (profitability and liquidity management) to the efficiency, continuity and the evolution of commercial bank, the following are the objective of the study;
1. To improve the management of the commercial banks, the essence of the profitability and the liquidity management.
2. Evaluating the extent of which, profitability and liquidity affects other element of the bank management.
3. To give way for more analysis by future study of the subject matter.
4. To evaluate the existing theories with contemporary liquidity management.

1.3 THE SIGNIFICANCE OF THE STUDY
The design of this research work has been made in a form to convey some educative and information messages to all and sundry most especially;