The Influence of Bank Liquidity on Lending Behaviour of Deposit Money Banks (DMBs) in Nigeria (2006 - 2020)

The relevance of DMBs and their lending activities in Nigeria necessitates concern about the liquidity condition of these banks. This is particularly pertinent, given the spate of recurring unpalatable incidences in the Nigerian banking sub-sector even after the 2005 consolidation. The objective of the study was to examine the influence of bank liquidity on lending behaviour of DMBs in Nigeria. Twelve (12) listed DMBs were selected using the convenience sampling technique. The ex post facto research design was adopted and secondary data drawn from the sampled DMBs from 2006 to 2020 were used for analysis. The data were analyzed using descriptive statistics and regression analysis. The results revealed that bank liquidity significantly influences lending behaviour of DMBs. However, the loan to total assets ratio was found to exert the highest relative influence on lending behaviour of DMBs. It was therefore recommended that DMBs should prioritize the maintenance of a dynamic loan to total assets ratio. Also the Central Bank of Nigeria and other regulatory bodies should be more proactive in ensuring DMBs’ liquidity and sustainability.

Authors

• Ofonime O. JEREMIAH
  Department of Accounting,
  University of Uyo.
  PMB 1017, Uyo
  ofonimejeremiah@uniuyo.edu.ng +2348038906190
• Essien AKPANUKO, Ph.D.
  Department of Accounting,
  University of Uyo.
  PMB 1017, Uyo
  essienakpanuko@uniuyo.edu.ng +2348023223518
• Ikechukwu ACHA, Ph.D.
  Department of Banking and Finance,
  University of Uyo.
  PMB 1017, Uyo
  ikechukwuacha@uniuyo.edu.ng +2348036057080