| dc.description.abstract | Liquidity level in the financial sector is key to financial intermediation, economic growth
and economic sustainability and key to all nations in the world. This is evident in the
development of guidelines and policies on liquidity management.The CBK has set the
liquidity ratio at 20%. Despite this commercial banks listed in the NSE posted averages
of 37%, 41.9% and 38.6% in 2011,2012 and 2013 respectively according to CBK
begging the question of what else determines this liquidity levels other than this statutory
requirement. Various studies have been conducted in this area but none specifically
investigated the influence of investment strategies, management policies and loan
structures on liquidity levels of the Ten commercial banks listed in NSE as at July 2014.
The purpose of this study therefore was to investigate the factors that determine the
liquidity levels of commercial banks listed on NSE. The study specifically sought to:
evaluate the influence of investment strategies, management policies and structure of
loans on the liquidity levels of commercial banks listed at NSE. The anchor theory is the
Keynesian theory on liquidty preference. A cross sectional approach and correlational
research design was used. The target population for the study comprissed of 254
divisional and departmental managers where a sample of 64 was selected using stratified
random sampling techique. Data was collected using a questionnaire which was pretested to identify errors. Pretest data using test-retest method had a correlation of 0.782
indicating high levels of reliability. Analysis of data was done using descriptive and
regression analysis.The regression model indicated that there was correlation between the
independent and dependent variables with an R of 0.247 at p >0.05. The results show that
with a one unit change in the investment strategies of the bank the liquidity levels will
increase by approximately 0.595 at p> 0.08. Secondly with a one unit change in loan
structure of the banks it alters liquidity levels by approximately 1.480 at p<0.009. Lastly
with one unit change in management policy the liquitity levels change by -1.754, at
p>0.006. The study concluded that all the independent variables affected liquidity levels
but at varying extents. However structure of loans was established to have more positive
effect on liquidity levels .Although management policy had a negative effect it had the
highest correlation with liquidity levels. The research recomends that banks must
undertake due diligence on their investments options , further classify the loan structures
to include very short term and very long term classes and that managerial decision be
made based on factual information and data rather than intuition to ensure profitability
and a better managed level of liquidity. | en_US |
