CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Basically, a bank has a two-fold function to receive deposits and to make such fund available as and when demanded by the depositors.
In connection with receiving deposits and making it available, there are many service that banks render which are fundamental important to the normal functioning.
According to Orjih (1980) a firm is said to be liquid when it is able to meet its obligations they become due. This by implication entails that a firm is said to be facing liquidity problems, when it cannot be able to meet its obligations as they become due.
The issue of liquidity problem in the Nigerian Banking Industry can not be over emphasized.
This has been considered disastrous in the past present and even in the anticipating future.
Liquidity problems has resulted to the loss of Goodwill of many banks distress as well as failure of most banks. Banks like society Generals, Allied Bank, Pan-African Bank, Progress Bank, Highland Bank of Nig ltd, etc are not an existence have faced distressed.
Hence, the researcher is motivated to write on this particular problem because of its present negative effect to most banks who though survive it, an well as those who are still being confronted by such problem.
1.2 STATEMENT OF THE STUDY
Presently, a lot of banks are being criticized by many individuals, people moving their funds from one bank to the other, people changing their bank of transaction to another.
Also so many banks are faced with the concept of liquidity problem, there by not being able to meet their obligations as and when due. Most individuals loss confidence on some banks while some do not have confidence on bank in general.
Furthermore, some categories of persons prefer holding their cash (liquidity preference) while some prefer investing it rather than saving such fund with the bank as a result of lack of trust and confidence on Nigerian Banks.
This research work is contained with the affect and causes of liquidity problem in Nigerian Banks Industry.
1.3 OBJECTIVE OF THE STUDY
The study of the work,” the effect of liquidity problem on the Nigerian Banking Industry. Intends to achieve the following objectives:
1. To find out the possible causes of liquidity problems.
2. To examine the effects of liquidity problem on the Nigerian Banking Industry.
3. To find out impact of liquidity problem on the Nigerian Banking Industry on the economy.
4. To identify way of contending with or possibly eradicating the causes liquidity problems on the Nigerian Banking sector.