Effect Of Liquidity Management On The Profitability Of Commercial Banks In Nigeria:-Osuala, Faith C

Abstract

The purpose of this research was to investigate the effect of the liquidity management on profitability ofcommercial banks in Nigeria during the period (2008 -2018). A sample offive commercial banks was usedfor the study. The liquidity indicators are current ratio, quick ratio, cash ratio, and investment ratio, while return on assets (ROA) was used as proxy for profitability. Secondary data obtainedfrom the annual reports and accounts ofthe selected commercial banks were usedfor the study. The hypothesesformulatedfor the study were tested using panel data multiple regression method. The empirical results show that return on asset (ROA) was significantly affected by current ratio, quick ratio, cash ratio and investment ratio. The study thereforerecommends that the management of the studied commercial banks should frequently check their banks’ exposure to liquidity risk so as to avoid insolvency and consequently, a run on the banks.