The Impact Of Liquidity Management On Financial Performance Of Selected Deposit Money Banks In Nigeria
ABSTRACT
This study was carried out to examine the impact of liquidity management on financial performance of deposit money banks in Nigeria using six banks with international affiliation. In particular, the paper established the relationship between the variable of bank performance and those of liquidity management using capital adequacy, liquidity ratio, and current ratio as indicators. Data were extracted from annual reports from the banks’ websites for a period spanning five years (2019 – 2023). Descriptive statistics and regression analysis were performed using the E-View 10.0 as instrument for the analysis. Findings indicate a strong positive relationship between capital adequacy and return on equity while liquidity and current ratio showed statistical insignificant negative relationship with return on equity. Bank size showed a strong positive relationship with return on equity. It was recommended that the regulatory body should ensure that deposit money banks in Nigeria are adequately capitalized to guarantee system stability while the bank managers should adhere to reserve requirements from the Central Bank so as to absorb financial shocks and operate profitably.