Liquidity and Performance of Deposits Money Banks in Nigeria
- November 6, 2020
- Posted by: RSIS Team
- Categories: Accounting, Banking & Finance, IJRISS
International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue X, October 2020 | ISSN 2454–6186
Liquidity and Performance of Deposits Money Banks in Nigeria
Okoli, Chukwudi Francis1, Ifurueze, Meshack S2, Nweze, Augustine U.3
1,2Department of Accountancy, Chukwuemeka Odumegwu Ojukwu University ,Anambra State, Nigeria.
3Department of Accountancy, Enugu State University of Science and Technology, Enugu State, Nigeria.
Abstract: The study examined the relationship between liquidity and performance of deposits money banks in Nigeria. The specific objectives of the study are to: determine the relationship between liquid assets to total assets and performance of deposits money banks; examine the relationship between liquid assets to short-term liabilities and performance of deposits money banks in Nigeria. Ten (10) banks were selected from the Nigeria Stock Exchange (NSE). The data used were secondary data and were drawn from 2009 to 2018. The panel data used were sourced from the bank’s annual report and Nigerian Stock Exchange fact book. The panel data collected were analysed using Ordinary Least Square Method. The results show that liquid assets to total assets and liquid assets to short-term liabilities have insignificant relationship with performance of deposits money banks in Nigeria. The study, therefore among others recommends that the Regulatory agency such as the Central Bank of Nigeria and the Nigerian Deposit Insurance Corporation should formulate rules (fiscal policy) that will enable the deposit-taking sector to withstand unexpected financial shocks and also improve their performance.
Keywords: Liquidity, performance, liquid assets, Banks, Nigeria.
I. INTRODUCTION
1.1 Background to the Study
Stability of the banks is provided by high profitability of their activities, and also sufficient liquidity which indicates that banks has a balanced structure of assets and liabilities (Klaas & Vagizova, 2014). Financial stability of the banks in medium term can be reduced because of insufficient quality of capital, assets and liabilities, associated with aggression of their credit policy that increases credit risk, and as a result, probability of losses. Poor quality of credit portfolio indicating that unqualified management approaches of a credit portfolio are used with insufficient capitalization of some of banks. But the size of capital defines ability of bank to maintain stability during the crisis periods, dependence on interbank credit market and significant share of demand liabilities in structure of bank liabilities (Klaas & Vagizova, 2014).
