EFFECTS OF LIQUIDITY MANAGEMENT ON THE PERFORMANCE OF COMMERCIAL BANKS IN RWANDA A CASE STUDY OF EQUITY BANK (2021 – 2023)

Abstract

This study investigates the effects of liquidity management on the performance of commercial banks in Rwanda, focusing on Equity Bank from 2021 to 2023. The specific objectives include analyzing the impact of liquidity management practices on the bank's financial performance, assessing compliance with liquidity management requirements, and examining the role of digital financial services in enhancing liquidity management. Employing a mixed-methods approach, data were collected from a sample of 31 participants, including senior management and finance officers, using questionnaires, followed by descriptive statistical analysis. The findings reveal a significant relationship between effective liquidity management and the bank's performance, as Equity Bank consistently meets its short-term obligations and regulatory requirements, thereby fostering customer trust. Recommendations include strengthening liquidity management practices through training, improving cash reserve ratios, leveraging digital financial services for real-time analytics, enhancing customer loyalty programs, and conducting regular performance assessments. These measures aim to optimize liquidity strategies and enhance overall financial stability.