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Liquidity Management and Profitability of Commercial Banks in Nigeria

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· Pages: 6 - 12· (2024)· Published: September 5, 2024
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Abstract

The study investigated the interplay among liquidity management measures and bank profitability in Nigeria, focusing on market liquidity, reserve management liquidity, and cashflow management. Using an ex post facto research design, the study analyzes secondary data from the audited financial reports of 10 commercial banks quoted on the Nigerian Exchange Group (NGX). These banks were selected based on their regulatory compliance and transparent reporting. Regression and correlation analyses were employed to test the hypotheses regarding the relationship between liquidity management and bank profitability, specifically profit after tax (PAT). The findings reveal an unfavourable and insignificant interplay among market liquidity and PAT, while reserve management liquidity and cashflow management show positive and significant relationships with PAT. The study concludes that effective reserve and cashflow management positively influences bank performance, while market liquidity strategies require reassessment. These results highlight the importance of prioritizing reserve and cashflow management to enhance profitability in Nigerian banks.

Keywords

LiquidityBank PerformanceProfit After TaxNigeria
Author details
Talexcy Consulting
Department of Accounting, Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria.
✉ Corresponding Author
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Ogboriyo Augustine Pereowei
Department of Accounting, Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria.
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Ateh Warefiniere
Department of Accounting, Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria.
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