Liquidity risk management and profitability nexus of listed banks in Ghana
Armstrong Ephraim Awinbugri
Journal Title:Organization Leadership and Development Quarterly (OLDQ)
The study examines the impact of liquidity management on the profitability of banks listed in Ghana Stock Exchange. Purposive sampling technique was used to select 7 banks out of the 10 listed banks. Quantitative research approach was adopted, making use of secondary data comprising audited financial statements as well as other significant rep orts within a ten-year period (2008-2017). The liquidity variables were investment ratio, quick ratio, capital ratio, net credit facilities/ total assets and liquid assets ratio, whilst return on equity (ROE) and return on assets (ROA) were the proxies for profitability (performance). It was observed that liquidity management have a positive and significant relationship with profitability of banks listed on Ghana stock market. In line with the findings, it was recommended that listed banks in Ghana must adopt effective liquidity risk management schemes to enhance profitability through sufficient holding of cash and cash equivalent resources to mitigate any liquidity gap that might result in reliance on repo markets.