ASSESSMENT OF LIQUIDITY RISK MANAGEMENTPRACTICE (THE CASE STUDY OF ABYSSINIA BANK OF GUBRE BRANCH)

Abstract

The main purpose of this study is to assess the Liquidity risk management practices of Abyssinia Bank from the year 2013 to 2016. There are four fundamental research question were formulated. The research examines the uniform (standardized) liquidity risk management strategy practice for Abyssinia Bank, examine how Abyssinia Bank managing its loan portfolios, examine the source of liquidity risk in the bank, and examine how Abyssinia Bank comply with NBE directive. To conduct the study descriptive design method was be employed. Purposive sampling technique used in the selection of department in Abyssinia Bank. Thus, 15the total number of respondents were selected. Data collected were both primary data and secondary data. The primary data collected through questioner and Secondary data like annual report were used. The data collected from primary source of data were organized table and percentage. The findings of the study revealed that the bank experience seasonal fluctuation in the source of funds which exposed to liquidity risk. The bank has strategies and contingency plan to meet emergencies. Therefore, the bank has strong side in preparing strategies and procedure. In addition, measurement and reporting system is a good practice. But, limited source of funds faces the bank t meet its short-term obligation.