THE EFFECT OF CASH MANAGEMENT ON PROFITABILITY OF BANKS IN NIGERIA

This study investigated the effect of cash management on the profitability of deposit money banks using Return on Assets (ROA) and Return on Equity (ROE) as a measure of profitability of First Bank PLC as a case study. An ex-post facto research design was adopted, utilizing audited financial data from 2020 to 2024. Statistical techniques including descriptive analysis, Pearson correlation, and multiple regression analysis were employed to examine the relationship among variables using SPSS. The regression results revealed that liquidity management had a strong and statistically significant positive effect on both profitability indicators (β = 1.986, p = 0.045; β = 4.982, p = 0.041. Bank account management also demonstrated a positive relationship with profitability (β = 0.016, p = 0.051; β = 0.072, p = 0.036), suggesting that efficient reconciliation and control of bank accounts directly enhance financial performance, particularly shareholder returns. Furthermore, cash management strategies, such as the investment of surplus cash in Treasury bills, were significantly associated with improved profitability (β = 0.009, p = 0.042; β = 0.033, p = 0.048). The study concluded that efficient cash management is a key determinant of profitability in Nigerian banks. It recommended the implementation of real-time liquidity monitoring systems, automated account reconciliation tools, and structured investment policies for idle funds. These practices will not only support operational efficiency and regulatory compliance but also drive sustainable profitability and competitive advantage in the banking sector