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ABSTRACT
The study examines the impact of liquidity management on the monetary performance of publicly listed deposit money institutions in Nigeria from 2012 to 2021. The main goal of this inquiry was to ascertain how these deposit money banks' financial performance is impacted by their liquidity ratio, loan-to-deposit ratio, cash reserve ratio, and capital adequacy ratio. Panel data regression techniques were used in the study's analysis. The results of the study showed a favorable correlation between the liquidity ratio and cash reserve ratio of the deposit money banks' financial performance in review, particularly their Return on Assets (ROA). These effects, however, are regarded as statistically negligible. On the other hand, although this impact is also regarded as statistically small, the loan-to-deposit ratio has a detrimental effect on the performance of deposit money institutions. Notably, the capital adequacy ratio shows that it has a statistically significant negative impact on the financial performance of deposit money institutions. The study recommends that it is imperative for the Central Bank of Nigeria to thoroughly assess, oversee, or scrutinize the effectiveness of the instruments utilized by banks to execute liquidity policies. Additionally, the study advises the application of appropriate penalties to banks in cases of non-compliance with these policies, which would ensure that the application of these policy tools is effective in achieving the desired liquidity level.
