Liquidity risk management and financial performance of listed deposit money banks in Nigeria

Abstract

The study was carried out to examine the effect of liquidity risk management on financial performance of listed deposit money banks in Nigeria. The population of the study is made up of the 14 listed deposit money banks in Nigeria. Using a census sampling techniques Jaiz bank was filtered out. Data were collected from annual reports and accounts of the selected banks for a period of 14 years 2006-2019 and analysed using STATA 13. The findings of the study revealed that both deposits to total assets (DTA) and total loan to total deposit (TLTD) have negative insignificance effects on returns on assets (ROA) of the selected banks. On the other hand, liquid assets to total assets (LATA) and short-term liabilities to liquid assets (STLLA) both have negative significant effect on ROA of the sample banks. Based on these findings, the study concludes that liquidity risk management has significant effect on the financial performance of listed deposit money banks in Nigeria. Based on this, the study recommends that the management of listed deposit money banks in Nigeria should maintain an optimum level of liquidity as it is capable of improving their performance.