Effect of Liquidity Risk Management Practices on Financial Performance of Firms Listed at the Nairobi Securities Exchange

Abstract

Financial performance in business is assessed using liquidity risk management practices. The importance of liquidity risk management practice to a firms’ performance gives directions on the aspects that governs the cost-effectiveness of a firm. Studies done before has not focused on the impact of liquidity risk management practices on profitability. Therefore, the present research studied the influence of liquidity risk management practices on result of finance of firms registered at the Nairobi Securities Exchange. The purpose for this research was to determine the influence of liquidity risk management practices on performance of monetary of firms registered at the Nairobi Securities Exchange. Financial statements was used to collect data from Nairobi Security Exchange and data analysis involved conducting multiple regression analysis. The research indicated that market risk positively affected the performance of finance of non-financial firms registered. The research examined that operational risk and credit risk were not insignificant in influencing financial performance of non-financial companies. The research advocates for non-financial firms to come up with mitigation measure against market risk to grow their financial performance because it was revealed that an upsurge in market risk positively affected the performance of finance. The research additionally commends a necessity for non-financial companies registered on the NSE to conduct risk analysis in order to undertake appropriate measure to counter the operational risk and credit risk so as to positively affect their performance of financial.