CHAPTER ONEINTRODUCTIONBACKGROUND OF THE STUDYThe impact of liquidity position in management of financial institution andother economic unit have remained fascinating and intriguing, though veryelusive in the process of in investment analysis visa- visa bank port foliomanagement.There appears to be an interminable argument in the literature over theyears on the roles, meaning and determinants of liquidity and creditmanagement. The Nigeria financial environment has noticed increase in creditwhich has become a problem to the country.Credit control described as to maximize the value of the firm byachieving a trade a trade off purpose of credit control is not to maximize salesor to minimize the risk of bad debt.In fact the firm should manage it credit in such a way that salesare expanded to an extent to which risk remains within an acceptableunit. These costs include the credit administration expenses bad debt, lossesand opportunity cost of the fund field up in receivables, the aim of liquiditymanagement should be to regulate and control these cost that cannot beeliminated together.8According to Begg, fisher and Rudiger (1991:130) liquidity refers tothe speed and certainty with which an asset can be converted back intomoney (cash, income) whenever theAsset holder desires, money itself is the most liquidity asset o allliquidity management seeks to ensure attainment of the short term objective.A liquid bank is one that stores enough liquid assets and cash togetherwith the ability to raise funds quickly from other source to enable it meet itspayment obligation and financial commitment in a timely manner.Therefore according to Ngwu (2006:36) liquidity management is theact of storing enough funds and raising funds quickly from the market tosatisfy depositor loan customer and other parties with a view to maintainpublic confidence.