Liquidity and Profitability of Listed Deposit Money Banks in Nigeria

Abstract

Given the present global economic challenges, deposit money bank plays a vital role in economic development. This study examined the relationship between liquidity on profitability of listed deposit money banks in Nigeria, with a target population of 13 quoted deposit money banks in Nigeria as at 31st December 2022. judgmental sample has been used to arrive at 9 sample size. The study covered a period of 10 years from 2013 to 2022.the study applied Stata V14.2 and the estimation techniques are OLS ordinary least square and diagnostic test (multi-collinearity and heteroscedasticity test), the data obtained were analysed using descriptive statistics, multiple regression and correlation co-efficient. The study adopts return on asset, return on equity as dependent variable for profitability and current asset, cash ratio and free cash flow as the independent variables for liquidity with leverage and company size as the control variables. The study concludes that, there is significant relationship between liquidity on profitability of listed deposit money banks in Nigeria, the study recommends management of DMBs to employs appropriate policy and measure that will make DMBs to be self-liquidate and solely not depend on maximization of profit but also management of effective liquidity level.