Cash Management and Liquidity Performance Case Study: Kenya Commercial Bank

Abstract

The study sought to evaluate the relationship between cash management and liquidity performance in KCB bank. Despite the bank having effective cash management, but the liquidity performance of the bank seems to be declining due to credit risks, poor timing of cash inflows and outflows. The research was a descriptive that employed both qualitative and quantitative methods of data collection and analysis. Specifically looked at cash inflows and liquidity performance, cash outflows and liquidity performance and cash holding cost and liquidity performance. Data was collected using questionnaires distributed to employees of KCB bank.

The findings of the study revealed that KCB bank has effective cash management procedures which has led to the growth and expansion of the bank. The findings of the study also revealed that the bank cannot survive without managing cash inflows, cash outflows and cash holding costs to have sufficient liquidity.

However ineffectiveness is also revealed where many employees of the organization do not know how to time cash inflows and outflows, minimizing credit risks, managing seasonal loans.

In light, the following recommendations are made, Managers should be informed on how to manage disbursements. The bank should minimize its credit risks by determining the borrower’s credit worthiness. The bank should manage timing of cash inflows and outflows to maintain sufficient liquidity, diversify its portfolio during investment and portfolio loans to spread risk.

Login to download()