Chapter One — 1.1 Background to the Study

Over the past decade, the relationship between working capital management and bank liquidity position has become a subject of considerable debate among scholars and industry practitioners alike, particularly within the context of Kano State where operating conditions differ markedly from more developed markets.

Kano State presents a useful setting for examining this relationship precisely because the conditions there — structural, regulatory, and behavioural — differ from those typically assumed in the broader literature, most of which draws on evidence from more developed economies.

1.2 Statement of the Problem

Despite a growing body of literature on working capital management, there remains limited consensus on the precise nature of its relationship with bank liquidity position, particularly within Kano State. Many organizations continue to make decisions about working capital management without a clear, evidence-based understanding of how those decisions ultimately affect bank liquidity position. This gap between practice and empirical understanding is the central problem this study seeks to address.

1.3 Objectives of the Study

1. To examine the effect of Working Capital Management on bank liquidity position in Kano State.
2. To assess the extent to which working capital management influences bank liquidity position within the study area.
3. To identify the challenges associated with working capital management in relation to bank liquidity position.
4. To recommend strategies for optimizing working capital management in order to improve bank liquidity position.

1.4 Research Questions

1. What is the effect of working capital management on bank liquidity position in Kano State?
2. To what extent does working capital management influence bank liquidity position within the study area?
3. What challenges are associated with working capital management in relation to bank liquidity position?
4. What strategies can be adopted to optimize working capital management in order to improve bank liquidity position?

1.5 Significance of the Study

Beyond its academic contribution to the field of finance / banking, this study has practical value for management teams within Kano State seeking to understand how working capital management translates into measurable outcomes around bank liquidity position. It is equally useful to students and future researchers looking for a localized empirical reference on this relationship.

1.6 Scope of the Study

In terms of scope, this study confines itself to Kano State, focusing specifically on how working capital management relates to bank liquidity position within that setting. Findings are interpreted within these boundaries rather than as universal claims applicable to every organization or market.