CORPORTE LIQUIDITY AND DEBT MANAGEMENT IN NIGERIAN DEPOSIT MONEY BANKS

This study examined the corporate liquidity and debt management that there is higher level of loan losses provision charged against profit and eventually leads to reduction in performance as measured by (ROA). The paper adopted a descriptive approach using published data from the balance sheets of DMBs. It examined the critical role played by the CBN and DMBs in fashioning out appropriate framework for liquidity management and identified the challenges inhibiting effective performance of these roles. In particular, the study revealed that deposit liabilities constituted a major source of funding liquidity by DMBs while loans and advances constituted the bulk of the illiquid assets. It was further found that DMBs in Nigeria operated above solvency level, having current ratio greater than unity. Also, DMBs in Nigeria are over cautious, investing more in short-term securities to protect their liquidity positions. But money market instruments played a diminishing role as a source of liquidity funding by DMBs. Among the major liquidity management challenges identified in the study was the inability of the monetary authorities to determine appropriate mix of policy instruments that would exert minimum costs while achieving monetary policy targets. As a way forward the paper recommended the adoption of priceB level as nominal anchor of monetary policy and the alignment of movements in systemic liquidity with the announced target of monetary policy stance of the CBN. Keyword: Corporate liquidity, debt management, ROA.