Effect Of Working Capital Management On The Performance Of Commercial Banks In Nigeria (A Study Of United Bank For Africa)

ABSTRACT

Management of working capital refers to management of current assets and current

liabilities. Firms may have an optimal level of working capital that maximizes their value.

Prior evidence has determined the relatiOnship between working capital and performance.

Thus, this study examined the effect of working capital management on the performance of

commercial banks by using audited annual jInancial statement for the period of2007 — 2015.

The proxies used to measure working capital management were Current Assets/Total Assets

and Current Liabilities/Total Assets as independent variables while that of dependent

variables were; Return of Equity (ROE,), Return of asset (RCA) and Net Profit Margin

(NPM). Four theories which include Quantity Theory of Money, Keynesian Theory of Money,

Barumol Inventory Model and the Modern Quantity Theory were used to support working

capital. The secondary source of data was used to extract data from financial statement.

Multiple regression models were used in the study and the data obtained were tabulated and

statistically analyzed using the Statistical Package for the Social Sciences (SPSS) Version.

The result revealed that working capital management positively or negatively affects the

performance of United Bank for Africa. The researcher also recommends that the united bank

of Africa should keep up to the same standard of working capital incmnageinent, as ii has

ensured their success in the past years.