Working Capital Management and the Performance of Selected Deposit Money Banks in Nigeria
Adebimpe Otu Umoren *
Department of Accounting, Faculty of Business Administration, University of Uyo, Nigeria
Ekubiat John Udo
Department of Accountancy, Akwa Ibom State Polytechnic, Ikot Osurua, Ikot Ekpene, Nigeria
*Author to whom correspondence should be addressed.
Abstract
The impact of working capital management on the liquidity and profitability of select deposit money banks in Nigeria was the main focus of this work. Ex-post facto research design was adopted for the study. Taro Yamane’s statistical formula was used to determine the sample size of ten out of twenty two deposit money banks in Nigeria. Purposive sampling technique was used to select the samples. Two hypotheses were formulated to guide the study and were analyzed using descriptive statistics, Pearson’s correlation coefficients and Regression analysis. The findings showed that there is significant positive relationship between banks’ performance and bank size; there is a significant negative relationship between profitability and cash conversion cycle and leverage; there is a significant negative relationship between liquidity and creditors’ payment period and leverage; and there is a significant positive relationship between liquidity and debtors’ collection period, cash conversion cycle and credit risk. It is recommended that the Central Bank of Nigeria should review the minimum capital requirement to N50 billion and banks in ‘trouble’ should be advised to merge or to be acquired by other mega bank(s).
Keywords: Working capital management, liquidity, profitability, deposit money banks, bank performance