AN APPRAISAL OF LIQUIDITY PROBLEMS IN COMMERCIAL BANK IN NIGERIA (A CASE STUDY OF FIRST BANK OF NIG PLC)

ABSTRACT
This study is aimed act appraising the liquidity problems in commercial banks in Nigeria with a problem in commercial banks in Nigeria with a view of determining how these problem affects commercial banking business as well as determining whether the policies imposed by the central bank has actually solved the liquidity problem of commercials banks or not. In doing this we want to classify the period under review (1980- 1989) in the Pre-SFEM period and the Post-SFEM period. On other words the study interns to discuss the Pre-SFEM and Post-SFEM experience of banks and offer useful suggestion as how to these problem could be alleviated if not eradicated.
For this purpose an empyreal survey and history research was carried on and the statistical tool used is percentages. The source of data for this study is primary and secondary sources. While the primary source consists of questionnaires and oral interview the secondary source is in the form of books journals and news papers.
The research revealed that prior to the introduction of the structural. Adjustment programme with the second tier foreign exchange (SFEM) as its main feature the structural adjustment programme (SAP) brought about the present liquidity crutch in banking system. It was further found out that both excess liquidity and shortage of liquidity affect the banks loans and advance as well as their profits. Further more it was observed.
That the policies imposed by the central bank have not solved the (excess and shortage ) liquidity problem of commercial banks.

As a result of these it is suggested among others that banks should intensify their efforts towards acquiring more deposit- drive for deposits (as it is popularly know )in order to alleviate the present problem of liquidity shortage in system.
More so there should be effective supervision of the follicles impose by the central bank to combat the liquidity problems of commercial banks to ensure that the policies are adequate implement other measure to alleviate either the excess or shortage of liquidity problem include adjustment of interest rate adjustment interest ratio, diversification of commercial banking service establishment of more rural banks to mobilize rural saving and so on. The essences of these are to maintain adequate liquidity and at the same time to ensure profit for the share holders.

BACKGROUND OF THE STUDY
Liquidity is the word that the banks use to descried their ability to satisfy demand for cash in each rang for deposit it can also be deficit as the capacity of the bank to meet promptly demand that it pays its obligation
A bank is considered to be liquid when it has sufficient cash and other liquid assets to gather with then ability to raises funds quickly from the source to enable it to meet its payment obligation and financial commitments in a timely manner. In addition there should be a sufficient liquidity before to meet all mostly financial emergencies.
How much liquidity to held and in what forms to hold it are a constant concern of bank management. Banks are required to comply with legal reserve requirement.

In addition banks need liquidity to meet seasonal and unexpected loan demands and deposit fluctuation. The majority of the traditions can be anticipate in advance and met from expected cash inflow from deposition repayment or earning.

Cash reserves also are needs to take advantages to unexpected profit opportunities.
Or for what might be farmed aggressive purposes when a business from which the banks has been working secure as a customer finally presents a loan application or a particularly desirable investment develops the banks must have funds available to seize these opportunities. During periods of expanding economic actively banks are frequently presented with attractive loan situation which can only be met if banks maintain adequate liquidity. To determine a banks need at a particular time is to fund the ration of loan to deposits. The higher the ration is the lees willing banks will be in lending out and vice versa.