Bullion
Keywords
Statutory Liquidity, Return on Asset, Prediction
Abstract
This study investigated the predictive power of banks' statutory liquidity on their protability in Nigeria between 1990 and 2019. The vector autoregression and variance decomposition methodology were employed. The findings showed that a change in return on asset (ROA) was weakly associated with itself, with liquidity variables, liquidity risk and real gross domestic product growth rates. In a five-year prediction, a 100% change in ROA was explained by itself in the short run. Other variables showed strong exogeneity with ROA, from short to long-run, an indication that banks in Nigeria face bleak future in using statutory liquidity to positively and signicantly affect profitability. Understanding these findings would assist policymakers in their liquidity/protability policy making, and the banks to re-strategize in their liquidity management.
Publication Title
Bullion
Issue
2
Volume
45
First Page
18
Last Page
31
Recommended Citation
Ukeje, Okonta Sunday Ph.D
(2021)
"The predictive power of banks' liquidity on profitability in Nigeria,"
Bullion: Vol. 45:
No.
2, Article 2.
Available at:
https://dc.cbn.gov.ng/bullion/vol45/iss2/2