EFFECT OF LIQUIDITY RISK MANAGEMENT ON THE FINANCIAL PERFORMANCE OF SELECTED DEPOSIT MONEY BANKS IN NIGERIA

The main aim of this study was to ascertain the effect of liquidity risk management on performance of selected deposit money banks in Nigeria from 2013 to 2022. The independent variables which were employed in order to ascertain the effect on corporate performance were; capital adequacy, capital leverage and liquidity coverage ratio. Ex post factor research design was adopted, secondary data sources were employed and the data were analyzed using hierarchical regression technique. Purposive sampling method was adopted to select twelve listed deposit money banks in Nigeria. The results from the study revealed that capital adequacy as well as capital leverage exert positive significant effect on ROE of deposit money banks in Nigeria. Aiso, the results revealed a negative significant relationship between interest coverage and performance of deposit money banks in Nigeria. It was thus concluded that astute bank management requires delicate balancing of the liquidity and profitability trade-off. Furthermore, the study recommended that banks in Nigeria should manage their loan portfolio and hedge their business risks in the market so as to sustain their financial performance. It was also recommended that deposit money banks in should maintain a higher level of capital which is commensurate with their risk profiles. The amount of debt finance in the financial mix of the firm should be at the optimal level so as to ensure adequate utilization of the firms' assets.