Abstract

This study investigated the effect of liquidity management on profitability of listed deposit money banks in Nigeria. Liquidity management was measured using current ratio, loan to deposit ratio and liquid ratio. However, profitability was measured using return on asset (ROA). To achieve the objective of the study, ex-post facto research design was adopted. Secondary data were used. Data were collected from annual report and accounts of the selected deposit money banks. The data collected were analyzed using panel regression analysis. The results revealed that liquidity management has a significant relationship with profitability. The study concludes that liquidity management remains a very strong factor in enhancing the level of profitability in deposit money banks in Nigeria. The study recommends that monetary authorities should urgently promote and legitimize the use of credit cards and mandate the use of cheque for large sums in regular business transactions. Due to the drastic reduction in cash mobility, this measure will go a long way toward resolving the issue of keeping large amounts of idle cash in the vault in anticipation of an unprecedented withdrawal.