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Original Research Article
Liquidity management and banks performance in Nigeria
*1Idowu Akinyele Akinwumi, 2Essien Joseph Micheal and 3Adegboyega Raymond
1Department of Banking and Finance, Federal Polytechnic Ede, Osun State, Nigeria
2Department of Banking and Finance, Ken Saro-Wiwa Polytechnic Bori, River State, Nigeria
3Department of Banking and Finance, Ogun State University Ago Iwoye, Ogun, Nigeria
*Corresponding Author Email: idakinyele(at)gmail.com
Article Number: | Pages: | | DOI:
Received: October 2, 2017 Accepted: November 20, 2017 Published: December 24, 2017
Abstract
The issue of liquidity and profitability management is a paramount one in the banking industry. The problem becomes pronounced when the commercial banks try to maximize their profit at the expense of liquidity. This causes technical and financial hardship in bank management and performance. This study was carried out on four deposit money banks in Nigeria between 2007 and 2016, using Pearson correlation co-efficient technique. The empirical results revealed that there is a statistically significant relationship between banks’ liquidity, return on asset and return on equity. However, the relationship is not all that statistically significant when return on asset was used as proxy for profitability. It was suggested that the banks should evaluate and redesign their liquidity management strategy so that it will optimize returns to shareholders equity and also optimize the use of the assets. The study showed that good management and control of factors influencing the liquidity of commercials banks in the country could improve the financial performance of banks.
Keywords: Equity, liquidity, bank deposit, assets, bank run