Assets and Liability Management and Return on Equity of Quoted Commercial Banks in Nigeria

Abstract

This study examined the relationship between assets and liability management and return on equity of quoted commercial banks from 2013-2023. Cross sectional data were sourced from annual reports of the quoted commercial banks. Return on equity was proxy for dependent variable while liquidity management, assets management, liability management and credit management were proxies for independent variables. Panel data regression was used as data analysis methods. Findings of the study revealed that the fixed effect model shows that the independent variable explains 89 percent variation on the return on equity. The F-statistics and the F-Probability validates that the model is significant. The beta coefficient showed that all the independent variables have positive effect on return on equity except liquidity management. From the findings, the study conclude that assets and liability management has significant relationship with return on equity of the quoted commercial banks in Nigeria. The study recommends that regular review of asset liability management policies and tools should be done by the bank’s board of directors to ensure that they are in line with market developments in Asset liability management process. Banks management should comply with cash reserve requirements, which help them to avoid insolvency and maintain sustainability profitability.

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