An Empirical Investigation of the Liquidity-Profitability Relationship in Nigerian Commercial Banks
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Date
2013
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Economics and Sustainable Development
Abstract
Abstract
The study critically assessed the relationship between liquidity and profitability of Nigerian commercial banks.
Purposive sampling method was used to select First Bank Nigeria Plc as the case study being the oldest and the
biggest among the 24 commercial banks currently operating in Nigeria. Secondary data collated from First
Bank’s annual reports of ten years (2002
square was employed to analyse the data. Student’s t
show that there is a very high correlation between liquidity of banks and their profita
shows that liquidity is a determining variable when it comes to banks profitability. To this end, it was therefore
recommended that the monetary authority should create a conducive environment that can boost banks’ liquidity
which will eventually transform to loanable funds and profit. Also, the Nigerian commercial banks are advised to
put in place efficient liquid management to forestall insolvency and bankruptcy
Description
Keywords
Profitability, Liquidity, Commercial banks