The main purpose of the study was to assess the liquidity risk management practice ofrncommercial banks in Ethiopia. To deal with the problem, three fundamental researchrnquestions were formulated that stress on the impact of liquidity on performance of banks,rnthe existence of standardized liquidity risk management strategy(practice) and the impactrnof the directives of NBE on the performance of commercial banks in Ethiopia.rnTo conduct the study, descriptive method was employed. Purposive sampling was used inrnthe selection of each bank and the respondents from the respective bank. Thus a total ofrn30 respondents participated to the sources of primary data for the study.rnData were collected through questionnaire, interview and annual reports of eachrncommercial bank. The data collected from primary and secondary sources werernorganized using tables and graphs ad interpretation was made on the data usingrnquantitative and qualitative methods.rnThe findings of the study revealed that there is no uniform (standardized) liquidity riskrnmanagement policy and procedure in the banking industry which is for all commercialrnbanks in Ethiopia. The directives issued by NBE have no significant impact that willrnaffect the performance of commercial banks instead they are important for the normalrnoperations of banks and the industry in general.rnThe over all liquidity position of commercial banks is excess which is caused by lowrneconomic development and existence of limited financial instruments in the country.rnLiquidity position of a bank has an impact on the performance of the bank. Too muchrnliquidity position of a bank decreases the performance of the respective bank unless thernexcess liquidity position is managed properly.rnAmong the factors that influence liquidity risk management by commercial banks inrnEthiopia include: absence of secondary markets, lack of enough financial instrumentsrnand absence of strong management information system.rnFinally, recommendations were forwarded based on the major findings so as to improvernthe liquidity risk management practice of commercial banks in Ethiopia