MANAGING LIQUIDITY RISKS IN BANKS : Case Study Rural Investment Credit Bank Cameroon
Anye, Paul (2018)
Centria-ammattikorkeakoulu
2018
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201803133337
https://urn.fi/URN:NBN:fi:amk-201803133337
Tiivistelmä
The research title Managing liquidity risks in banks was carried out in Rural investment credit bank (RIC) Bamenda, North West region Cameroon. The research was carried out based on the observation that in most financial institutions in Cameroon, despite adequate capital levels still experienced diffi-culties because they did not manage their liquidity in a prudent manner. The technique of managing liquidity risk was not the best. The aim of this researcher is to assess the cause of liquidity problems faced by the institution and how it can properly be managed.
This study is arranged into five different structures; introduction, presentation of the case company, risk management theories, presentation and analysis of data and recommendations. Research questions were issued and some found responses in the theoretical part of the research. From primary data, the re-searcher used a questionnaire which was administered on tables with a sample of 18 and 10 persons responded accurately which was used in the research, discussion with staff; on the spot observation and interview. Tables were used for presentation of data collected. From the analysis of data, it was discov-ered that the most appropriate way to manage liquidity risk is through stored liquidity management, and the main cause of liquidity risk is concentration of loans in a sector. Generally, it could be observed from this research work that; despite the increasing importance of Liquidity risk management which is the backbone of all financial institution, most institutions still fail to meet up with the liquidity needs of their customers. This is because most workers recruited are not expertise or skilled to do the job so far as liquidity risk management is concern. The organization used poor recruitment and selection pro-cedure, concentration of loans in a particular sector and maturity miss match.
The researcher then recommended that rural investment credit should create a risk management depart-ment that will effectively manage the recruitment, selection, and training of liquidity risk managers in the institution, diversity their risk by spreading loans to other sectors such as education, agriculture and real estate; they should match their assets with their liabilities, and should also follow strictly the pru-dential ratio. The researcher then suggested that further studies should be carried out in this same field.
This study is arranged into five different structures; introduction, presentation of the case company, risk management theories, presentation and analysis of data and recommendations. Research questions were issued and some found responses in the theoretical part of the research. From primary data, the re-searcher used a questionnaire which was administered on tables with a sample of 18 and 10 persons responded accurately which was used in the research, discussion with staff; on the spot observation and interview. Tables were used for presentation of data collected. From the analysis of data, it was discov-ered that the most appropriate way to manage liquidity risk is through stored liquidity management, and the main cause of liquidity risk is concentration of loans in a sector. Generally, it could be observed from this research work that; despite the increasing importance of Liquidity risk management which is the backbone of all financial institution, most institutions still fail to meet up with the liquidity needs of their customers. This is because most workers recruited are not expertise or skilled to do the job so far as liquidity risk management is concern. The organization used poor recruitment and selection pro-cedure, concentration of loans in a particular sector and maturity miss match.
The researcher then recommended that rural investment credit should create a risk management depart-ment that will effectively manage the recruitment, selection, and training of liquidity risk managers in the institution, diversity their risk by spreading loans to other sectors such as education, agriculture and real estate; they should match their assets with their liabilities, and should also follow strictly the pru-dential ratio. The researcher then suggested that further studies should be carried out in this same field.