Impact of Liquidity Management on the Profitability of Nigeria Listed Deposit Money Banks

Abstract

This study explored the impact of liquidity management on the profitability of Nigerian banking sector. An ex-post facto research design was adopted, drawing on secondary data from the audited financial statements of eight Deposit Money Banks (DMBS) purposively selected from the 24 banks operating in Nigeria as of 2023. The data spanned a five-year period (2018–2022), enabling a longitudinal analysis of trends over time. The collected data were analyzed using both descriptive and inferential statistics. Descriptive statistics, including tables and standard deviation, were employed alongside inferential techniques such as correlation analysis, multiple regression analysis, and Granger Causality Test. The findings demonstrated a statistically significant positive correlation between liquidity management and profitability of the selected DMBs, indicating that banks with more efficient liquidity management strategies are associated with enhanced profitability. These results contribute to the body of knowledge by offering empirical evidence of the importance of sound liquidity management practice in improving financial performance. The study provides actionable insights for policymakers and financial managers, highlighting the strategic role of effective liquidity management in sustaining long-term profitability in the banking sector.