Liquidity Management and Profitability of Deposit Money Banks in Nigeria: An Impact Analysis

Abstract

This study empirically examined the impact of liquidity management on profitability of deposit money banks in Nigeria. The specific objectives were to determine the impact of cash management on banks’ return on asset, evaluate the impact of shareholders’ capital on banks’ return on asset and ascertain the relationship between loan to deposit ratio and return on assets of banks. Expost facto design was adopted. The data used for this study were collected from Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporations (NDIC) covering the period 1995-2021. Data collected were analyzed using descriptive statistics and multiple regression analysis. Findings revealed that cash management and shareholders’ capital have significant relationship with banks’ return on assets. It however showed that there is significant relationship between loan to deposit ratio and return on assets. Based on the findings, it recommended that the bank management device efficient cash management policies to enhance their profitability