Liquidity risk and profitability: An assessment of Nigerian banks

The paper examines liquidity risk and profitability from the Nigerian banking sector perspective. Primary data were collected from a sample of 518 distributed among staff of banks, with a response rate of 76%. In addition to this, published financial statements of banks from 2006-2010 were used. Finding shows that there is a significant relationship between liquidity risk and profitability of both domestic and foreign banks in Nigeria. It was recommended thatthere is need to improve transparency of the financial system, which in turn would assist financial institutions to evaluate liquidity risk more effectively and to avoid problems associated with hazardous exposure.Keywords: Liquidity risk, Profitability, Recapitalization, Domestic ban