Corporate Governance and Liquidity Management: Evidence from Nigerian Deposit Money Banks

Authors

1 Department of Accounting, Faculty of Management Sciences, University of Benin, Benin City, Edo, State, Nigeria

2 Department of Accounting, Babcock University, Ilishan Remo, Ogun State, Nigeria

3 Department of Accounting & Finance, Caleb University, Imota, Lagos State, Nigeria

Abstract

The liquidity crisis is the major driver of banks' failure in Nigeria as a failure of some banks in the past was brought in connection with a liquidity problem. We examined the CG and LM of Nigerian banks by obtaining data from annual accounts and reports of the 10 DMBs from 2012 to 2018.  Data were analyzed using the Generalized Method of Moment (GMM). Findings showed that the previous year's liquidity significantly and positively influence the current year's liquidity ratio. Board size exerts a negative insignificant influence on liquidity management; meetings have a direct but insignificant influence on liquidity management. Board independence shows a significant but negative effect on liquidity management. Gender diversity and bank size were found to exhibit indirect and insignificant influence. The study concludes that corporate governance exhibits a joint significant effect on liquidity management of Nigerian DMBs. The main recommendation arising from the finding is that the inclusion of directors on the board should be based on their skills and ability to understand and drive banks' operations.

Keywords

References

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Iranian Economic Review
Volume 25, Issue 4
December 2021
Pages 791-801

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