LIQUIDITY RISK MANAGEMENT AND FINANCIAL STABILITY OF MANUFACTURING COMPANIES QUOTED ON THE NIGERIA STOCK EXCHANGE
Keywords:
Financial Stability, Liquidity Gap, Liquidity Risk, Liquidity Risk Management And Risk ManagementAbstract
A financially stable entity is the desire of every rational investor and manager. In the desire to ensure that a firm continues to be financially stable, managers put in place risk management measures that ought to enhance the financial stability of the firms. This study is focused on finding the effect of liquidity risk management on the financial stability of manufacturing firms in Nigeria. An ex-post facto research design is adopted for this study and the study’s population is 20 consumer goods manufacturing companies quoted on the Nigeria Stock Exchange as of 30th March 2022. Data used for the study is for a ten-year period (10), (2011-2020) and were extracted from sampled companies’ audited annual reports for the sampled period. In analyzing the data, inferential as well as descriptive statistics were employed. The result revealed that liquidity risk measured by liquidity risk and liquidity gap have both significant and insignificant effects on financial stability measured by (CFAR, ROA, ROE and LQY) of Consumer Goods Manufacturing Companies in Nigeria. The study’s recommendations are that finance Managers should pay very close attention to liquidity risk so as to manage it properly in other to ensure that it contributes in a significant manner positively to the financial stability of their firms and that finance managers should ensure that the liquidity gap of their firm is well maintained to always be positive for effective risk management that will enhance the financial stability of their firms.
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Copyright (c) 2023 Onyeka-Iheme, Chimeruo Victory, Akintoye, Ishola Rufus (Author)
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