The Impact of Liquidity Management on Bank Financial Performance in a Subdued Economic Environment: A Case of the Zimbabwean Banking Industry

Abstract

This study aims to investigate the liquidity position and its impact on the financial performance of Omani Banks with the eventual objective to advice policies to improve the management of liquidity risk in Omani banks. A sample of 4 local commercial banks has been used to examine the relationship between the Liquidity and Financial performance for the period of five years from 2010-2014. The data has been taken from the Banks annual reports using multiple regression analysis. The study concluded significant relationship between the bank's loans to total assets ratio, illiquid assets to liquid liabilities ratio and bank's ROA; bank's Liquid assets/deposits; Liquid assets/Short term liabilities and ROE; and bank's Loans/Total assets, Loans/Deposits & short term liabilities; Bank's loans - customer deposits/Total assets and ROAA. However, The study finds no significant relationship between Omani bank liquidity position (such as a bank high ability to absorb shocks, liquidity at short-term, ability to cope with long term liquidity risk, less liquidity and less risk exposure) and NIM.