The effect of liquidity risk on the performance of banks: Evidence from Jordan

This study aimed to determine the impact of liquidity risk on financial performance of Jordanian banks, where liquidity risk was measured by (Liquidity ratio, net working capital, cash and investment ratio to total deposits), and financial performance was also measured through the index (return on assets) and the modifying variable (bank size) measured through the natural logarithm of total assets was also added. To achieve the objectives of the study, the analytical quantitative approach was adopted. The study community consisted of all 13 commercial banks listed on the Amman Stock Exchange. All banks in the study community were selected as a study sample using the comprehensive survey method, and the statistical analysis program (SPSS) was used to test the study hypotheses. Based on the results of the statistical analysis, it was found that there was an impact of liquidity risk on financial performance measured by return on assets in Jordanian commercial banks listed on Amman Stock Exchange, and there was an impact for each of (current liquidity ratio, net working capital, cash and investment ratio to total deposits) on financial performance measured by return on assets in Jordanian commercial banks listed on Amman Stock Exchange. It was also found that the size of the bank contributes to modifying the effect of liquidity risk on financial performance measured by return on assets in Jordanian commercial banks listed on Amman Stock Exchange. The study concluded a set of recommendations, the most important of which are: commercial bank administrations should increase interest in exploiting their liquidity within acceptable risk limits to reach optimal ratios for financial performance by balancing the returns to be achieved with the potential risks of such expenses in a way that ensures the positive impact of liquidity risk on the financial performance of those banks.

Credit and Liquidity Risk Assessment of NCC Bank: A Correlational Analysis

Credit risk and default risk are two interchangeable terms. Credit risk arises mainly from the lending, trade finance, leasing, and treasury business. This can be described as a potential loss from a counterparty's failure to perform as per contractual agreement with the bank being financially incapable or unwilling to repay it. Financial incapability arises when the creditor's source of earning becomes volatile. The unwillingness comes from the creditor's tendency to cheat and to make a bulk grain from the fraudulent activities. At a stretch, credit risk for the bank illustrates that the bank's performing loan portion can turn into non-performing ones. And that will decrease the recovery rate of the loan extended, and, as a result, the bank will face trouble providing the required interest amount by the depositors. Gradually the bank will become insolvent and maybe some days a bankrupt one.

Risk Management and Financial Performance of Manufacturing Firms in Nigeria

The current study investigated risk management and financial performance of manufacturing firms. Specifically, the study analyzed liquidity risk and market risk effect on after tax profit of manufacturing establishment in Nigeria. The study employed panel data over the period spanning from 2010-2019 across 10 firms. Secondary data were gathered through the annual reports of the selected firms. Correlation analysis and panel-based estimation techniques were used. The outcome showed that liquidity risk positively and significantly affect profit after tax while market risk (measured by interest rate risk) negatively and insignificantly affect profit after tax of sampled firms quoted in Nigeria. This study concluded that efficient and effective risk management will positively affect performance of quoted firms in Nigeria, most specially management of internal risk such as the liquidity risk. Hence, firms should build an internal control system flexible in nature to harness the benefit of internal risk management and also normalize the negative effect of external risk such as the interest rate on performance.

Analysis of an Optimal Model for Liquidity Management of Financial Assets Using an Intelligent Scheduling Approach

This paper adopts the intelligent scheduling method to conduct an in-depth study and analysis on the optimization of financial asset liquidity management model, elaborates and analyzes the liquidity risk management theory of commercial banks, and reviews the progress of liquidity risk management research in domestic and foreign academia as the theoretical basis of this paper. After that, we analyze the liquidity risk management of Anhui Tianchang Rural Commercial Bank from both qualitative and quantitative levels and further review and analyze the problems and causes. Finally, the full research is summarized and reviewed, theoretical and practical insights are discussed and analyzed, and future liquidity risk management research priorities and directions are elaborated. Based on the analysis results, the problems of the bank in liquidity risk management are described one by one, and further deep-seated cause discovery is carried out to summarize the problems of liquidity risk management which exist in the bank’s operation process due to the lack of liquidity risk management, unbalanced asset, and liability allocation, as well as weak emergency management capability, insufficient day-to-day liquidity monitoring, and lack of professional talents. For the problems and causes of the study, effective suggestions on how to strengthen the bank’s liquidity risk management in multiple aspects are proposed. It is hoped that, by improving the bank’s liquidity risk management and reducing the chance of liquidity risk occurrence, the bank’s sustainable development can be enhanced, and it is also hoped that it can provide some reference for the liquidity risk management of similar rural small- and medium-sized financial institutions.

Risk analysis of companies’ activities on the basis of non-financial and financial statements

Purpose. The purpose of the article is to study the degree of disclosure of information about the risks of economic activity of enterprises in non-financial statements and to find ways to improve the organization and methods of analysis of such risks based on the financial statements of companies. Methodology / approach. The methodological basis of the study is a systematic approach, methods of generalization, comparison, abstraction, analysis, synthesis, induction and deduction, bibliometric analysis, cluster analysis, as well as methods of integrated economic analysis. The publications from the Scopus database, for 1988–01.04.2021, processed by VOSviewer software were the source of data for bibliographic and cluster analysis. The materials of the research on the state of disclosure of information about the risks of domestic enterprises of the food industry are based on their financial statements and management report. Results. The article analyzes the state and degree of disclosure of information about the risks of economic activity in non-financial reports of domestic food industry enterprises. It is established that the enterprises of the studied industry most often provide information about the following risks: economic, currency, financial, political, legal, judicial, interest, personnel, price, commercial, as well as liquidity risk and market risk. Originality / scientific novelty. Theoretical, methodological and organizational principles of risk analysis of companies based on non-financial and financial reports have been further developed. For the first time, we proposed our own approach to the methodology of analysis of such risks, based on financial reporting indicators. In particular, such analytical indicators include: financial risk – solvency, financial leverage; credit risk – investment coverage ratio, return on equity, return on assets; liquidity risk – coverage ratio, quick liquidity ratio, absolute liquidity ratio. Practical value / implications. The practical value of the research is that the results obtained by the authors will contribute to the disclosure of information about the risks of economic activity of enterprises in non-financial statements. Analysis of the status and level of disclosure of information about the risks of domestic food industry enterprises in non-financial reports showed that most companies provided information about the following risks: economic, currency, financial, political, legal, judicial, interest, personnel, price, commercial, and risk liquidity and the risk of changes in market conditions. As a result, the author's methodological approach to the analysis of internal risks of the studied industry (credit, financial risks, liquidity risk) is proposed. The proposed methodology is based on the indicators of financial reporting and is part of a comprehensive risk analysis of the enterprise for the purposes of the risk management system.