IMPACT OF LIQUIDITY MANAGEMENT AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

This study investigated the impact of liquidity management on the financial performance of Deposit Money Banks (DMBs) in Nigeria. The study was motivated by the critical role liquidity plays in ensuring the stability, profitability, and operational efficiency of banks. An ex-post facto research design was adopted, utilizing secondary data obtained from the annual reports and financial statements of selected Deposit Money Banks in Nigeria over the study period. Liquidity management was measured using liquidity ratio, loan-to-deposit ratio, and cash reserve ratio, while financial performance was measured using return on assets (ROA) and return on equity (ROE). Data were analyzed using descriptive statistics, correlation analysis, and multiple regression techniques. The findings revealed that liquidity management significantly influences the financial performance of Deposit Money Banks in Nigeria. Specifically, adequate liquidity levels were found to enhance profitability and reduce financial distress. The study concludes that effective liquidity management remains a critical determinant of bank performance and sustainability. The study recommends that bank management should maintain an optimal liquidity level that balances profitability and risk while ensuring compliance with regulatory requirements.