LIQUIDITY MANAGEMENT AND PERFORMANCE OF DEPOSIT MONEY BANK'S IN NIGERIA
Abstract
This study investigates the impact of liquidity management on the performance of Deposit Money Banks (DMBs) in Nigeria. Using key liquidity indicators such as the liquidity ratio, loan-to-deposit ratio, and cash reserve ratio, the study assesses how liquidity levels influence profitability measured by Return on Assets (ROA) and Return on Equity (ROE). Secondary data were obtained from annual reports of selected banks and the Central Bank of Nigeria (CBN) statistical bulletin. The findings reveal that effective liquidity management significantly enhances bank performance by ensuring stability, meeting withdrawal demands, and supporting credit creation. Poor liquidity management was found to increase insolvency risks and negatively affect profitability. The study concludes that maintaining optimal liquidity levels is crucial for the operational efficiency and long-term sustainability of Nigerian banks.
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