IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 10 NO. 8 2024
DOI: 10.56201/ijbfr.v10.no8.2024.pg100.126

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Liquidity Management and Profitability of Deposit Money Banks in Nigeria

Akpan, Stella Augustine, Dr. Eno Gregory Ukpong, Dr. Uwem E. Uwah

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Abstract

The Effect of Liquidity Management on the Profitability of Deposit Money Banks in Nigeria, the problem of most Nigerian money deposit banks is that they tend to focus more on profit maximization than taking liquidity measures to meet the demands of their customers and fulfilling their obligations to their clients as at when due and in that process, they are losing a large proportion of their clients. It is believed this issue can be resolved if the banks take their liquidity management as necessary as the way they focus on profitability so that they can benefit from the impact of a well-managed liquidity on profit maximization. The main objective of this study was to investigate the liquidity and profitability of deposit money banks in Nigeria. The research work adopted the ex-post facto research design. The population of this study was fourteen (14) deposit money banks listed on the Nigerian Exchange Group. The study made use of secondary data. Data from the financial reports were extracted using content analysis from the financial statements of the selected banks. Descriptive statistics and linear regression analysis were adopted as the data analysis technique of this study. The following were the major findings of the study: There is a significant effect of current ratio on the profitability of banks in Nigeria. There is a significant effect of cash ratio on the profitability of banks in Nigeria. There is an insignificant effect of debt- to-assets ratio on the profitability of banks in Nigeria. Based on the findings of the study, it can be concluded liquidity significantly affects the profitability of banks. However, based on the result of the analysis, the debt to assets ratio had insignificant effect on the profitability of banks in Nigeria. The following recommendations were raised; The management of the deposit money banks should maintain an equilibrium in the management of their current ratio. This would assist in the i

keywords:

Cash Ratio, Current Ratio, Current Ratio

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