Tag Archives: Liquidity Management

Liquidity Management and Corporate Sustainability of listed Oil and Gas Companies: Empirical Evidence from Nigeria (Published)

Investors had watched the fragile state of corporate sustainability of the oil and gas companies, as huge capital investments had been lost due to the unpredictable nature of prices occasioned by the unstable foreign exchange rate. Studies have shown that profitability, assets growth and economic value added expectations of investors rely on skillful and efficient management of the companies’ resources especially, liquidity management, which were considered inadequate. Consequently, the study investigated the effect of liquidity management on corporate sustainability of the oil and gas companies in Nigeria.The study explored ex-post facto research design. The population consisted of 13 listed oil and gas companies listed on the Nigerian Stock Exchange as at 31st December 2017. Ten oil and gas companies were selected using purposive sampling technique. Data were extracted from published financial statements of the sampled companies, while the validity and reliability of the data were premised on the scrutiny and certification by the external auditors.  Descriptive statistics and inferential statistics were used for the data analysis.The study revealed that corporate sustainability of quoted oil and gas companies in Nigerian was significantly affected by liquidity management. Results showed that liquidity management had a positive significant effect on profitability, F-Statistics (4, 95) = 3.493; AdjR2 = 0.092; P-value = 0.010; while liquidity management also exhibited a positive significant effect on assets growth, F-Statistics (4, 95) = 0.3.030; AdjR2 = 0.076; P-value= 0.021. Also, liquidity management exhibited a positive significant impact on economic value added.  F-Statistics (4, 95) = 2.598; AdjR2 = 0.054; P-value = 0.035. When the control variable was introduced, the results revealed that liquidity management had a positive significant effect on profitability, F-Statistics (5, 94) = 3.020; AdjR2 = 0.093; P-value = 0.014; while liquidity management also exhibited a positive significant effect on assets growth, F-Statistics (5, 94) = 2.488; AdjR2 = 0.070; P-value= 0.037. Also, liquidity management exhibited a positive significant impact on economic value added.  F-Statistics (5, 94) = 4.683; AdjR2 = 0.159; P-value = 0.001.The study concluded that liquidity management affected corporate sustainability of quoted oil and gas companies in Nigerian. The study recommended that shareholders, managers, policy makers, financial regulators and market participants should be mindful of companies’ liquidity management and time lag between credit sales and collection of receivables as critical to the corporate sustainability companies. Managers should revisit cash conversion cycle policy time-lag, and ensure effective resource management because of their importance to corporate sustainability.

Keywords: Liquidity Management, Quick Ratio, assets growth, cash conversion, corporate sustainability, economic value added

Qualitative analysis into liquidity management by SMEs in the UAE (Published)

Small and Medium Enterprises or commonly referred to as SMEs are an important component of any nation. In the UAE, SMEs account for a large bulk of economic trade as well as provide invaluable job opportunities. Liquidity management is predominantly a key component for the long-term sustenance of any business, let alone SMEs. Lack of persistent liquidity could swindle the business model of the SMEs and could have pernicious effect on doing business in the region. The sinister effect of lack of effective liquidity management tools could be disastrous for the industry as a whole. Hence managing liquidity – both long term and short term, is imperative, especially when sources of liquidity are limited. This paper is an attempt to explore liquidity avenues for SMEs and how do SMEs manage their day-to-day liquidity to meet the going concern requirements. The paper will involve qualitative analysis that involves semi structured interviews with certain SMEs to gauge liquidity management by SMEs in the UAE.

Keywords: Bank, Financing, Liquidity Management, SME, UAE

Effect of Liquidity Management on the Financial Performance of Banks in Nigeria (Published)

This study examines the effect of liquidity management on financial performance of banks in Nigeria for the period 2010 to 2018. The study uses secondary data from five banks listed bank on the stock exchange in Nigeria. The proxies employ for liquidity management are; Liquidity ratio (LQR), Loan to deposit ratio (LDR), Cash reserve ratio (CRR) and deposit ratio (DR), while return on assets (ROA), return on equity (ROE) and return on net interest margin (NIM) are proxies for financial performance (Profitability). The study uses panel regression analysis in estimating the model and Hausman test while making a choice between fixed effect and random effect model. The study finds that liquidity ratio (LQR) have positive and significant effect on financial performance of DMB as measured by return on assets (ROA), return on equity (ROE) and net interest margin(NIM).It therefore recommends that banks in Nigeria should establish sound governance and risk management systems by developing strategies, policies for  liquidity management that is well integrated into its risk management practices as well as establish a contingency funding plan to address any liquidity shortfall during periods of stress or emergency while ensuring  that  active monitoring liquidity funding needs to avert any liquidity challenge that could trigger crisis in the banks is promptly addressed.

Keywords: Banks’, Liquidity Management, Profitability

IMPACT OF LIQUIDITY MANAGEMENT ON THE PERFORMANCE OF AGRIBUSINESS SECTOR IN NIGERIA (1978-2013) (Published)

The performance of the agro-industrial sector in terms of output and exports is of great importance in Nigeria, and the influence of liquidity management is of essence in assessing its growth and development. Therefor this research work is on determining the impact of liquidity management on the performance of agribusiness sector Nigeria (1978-2013). The data used was sourced from the central bank of Nigeria (CBN) statistical bulletin, and were analysed using multiple regression analysis statistical technique. The findings of the study revealed thatliquidity management had a strong bearing on the performance level in the agro-industrial sector in Nigeria.Liquidity management, value of ACGSF loans to agribusiness subsector, government capital expenditure on agriculture, value food import, and rainfall significantly determined agribusiness output in Nigeria within the period under review and based on the specified model. Liquidity management, aggregate producer’s price, agribusiness output and aggregate world price of commodity index significantly determined quantity of agribusiness export in Nigeria within the period of study and based on the specified model.It is recommended that the government should display a high sense of commitmentin its liquidity management to bring about a realistic performance in the agribusiness sector.Farm support policies such as subsidization of agribusiness inputs to produce the desired multiplier effects on agribusiness and food production and the provision of yield increasing technologies are expedient in ensuring that the agricultural sector received the desired boosts and acceleration that it required to meet the food demand of the populace and are hence advocated. Output price incentive scheme is recommended but should not be designed as a welfare scheme rather emphasis of the scheme should be the attainment of the objectives of increasing agribusiness output and export in Nigeria within the possible short period of time.

Keywords: Agribusiness Sector, Liquidity Management, Nigeria, Performance