The aim of the study to examine the effect of liquidity management on the performance of selectedrncommercial banks of Ethiopia. In order to achieve the stated objectives a quantitative approach wasrnused. To this end, the researcher took nine explanatory variables of liquidity management variables;rnthose are bank specific (Capital adequacy(CAP),current assets to total asset ratio(CATAR),loan torndeposit ratio(LDR),liquid assets to net current liability ratio(LACLR),liquid asset to total assetrnratio(LATAR),liquid assets to deposit ratio(LATDR),non-interest expense to total incomernratio(ME)and macro-economic variables(GDP and inflation rate(INF)).Balanced fixed effect panelrnregression was used for the data of seven commercial banks(namely Awash bank(AIB), Bank ofrnAbyssinia(BOA),Commercial bank of Ethiopia(CBE),Dashen bank(DB), Nib internationalrnbank(NIB),Hibret bank(HB) and Wegagen bank(WB) in the sample covered the period from 2000 torn2018 G.C. The study used return of asset (ROA) used as dependent variable for measuring thernprofitability of the selected commercial banks the above liquidity variables used as explanatoryrnvariables. The study based on a balanced panel constructed ordinary least square (OLS) and fixedrneffect model. The regression result showed that capital adequacy (CAP), GDP and inflation rate had arnpositive and significant effect and non-interest expense to total revenue ratio had negative andrnsignificant effect. On the other hand current asset to total asset ratio (CATAR), loan to deposit ratiorn(LDR) had positive but insignificant effect and liquid asset ratio (LATAR), Liquid assets to net currentrnliabilities ratio (Quick ratio) and liquid asset to deposit ratio (LATDR) had inverse relationship andrninsignificant effect on the ROA of the selected commercial banks within the study time frame.rnTherefore, liquidity management had non-linear effect on the performance of the banks.