Determinants of liquidity risk management in Microfinance Institutions

Abstract

Liquidity is the bank capacity to increase in both expected and unexpected cash as a collateral obligations at reasonable cost without incurring acceptable and unacceptable loss. Good liquidity system reduce the problems. In MFIs the good liquidity can be healthful for financial condition. For checking the role of liquidity we conducted a research design. The target population are employees of District Bahawalnagar MFIs. Questionnaire are used to collect data from the employees and data is analyzed through SPSS. The hypothesis was tested using multiple regression analysis. The study results in that the internal control, institution policies, institution board management, risk monitoring strategies significantly affect the liquidity risk management in MFIs. The MFIs have good internal control system and great strategies from the board should be delivered to the management. The good liquidity risk management makes the healthy financial condition for every microfinance institution. There is adequacy in the analyzing, controlling and monitoring the liquidity risk in MFIs.