Cash Management and Bank’s Financial Performance: Evidence from selected Deposit Money Banks in Nigeria

Peter Ali, Peter N. O. Njoku, John N. N. Ugoani, O. C. Nwaorgu, Okanta S Ukeje


This study empirically examined the effects and implications of cash management of DMBs in Nigeria. The variables studied were Cash to total asset, Operating cash to total asset, Investing cash to total asset, Financing cash to total asset, Bank size, Bank age, proxied for cash management and Return on Asset used to represent financial performance. Data used for this study were from secondary sources and were generated from the annual reports and accounts of the selected DMBs for the period 2014–2018. The results show that while operating cash to total asset of bank, investing cash to total asset and bank size have no significant effect on financial performance of DMBs, financing cash to total asset and bank age have a significant and positive effect on financial performance of deposit money bank (DMBs). However, cash to total asset has a significant negative effect on financial perfor-mance of banks. The study concludes that cash positions, which can lead to liquidity risk has to be managed because it has tendency to compound other risks. It further highlighted that adequate attention should be paid on the use and reserves of cash among banks in Nigeria. This study recommends that banks should adopt optimum cash management model for efficiency and effectiveness. Stringent regulatory policies in this regard must be reviewed in such a way that they can be relaxed, to encourage effective liquidity manage-ment measures.


Cash management, financial performance, banking system, deposit money banks

Full Text:



Abubakar, A., Sulaiman A. S., Usman, B., & Mohammed, M. U. (2019). Credit risk management and financial performance of quoted deposit money banks in Nigeria. Journal of Finance, Accounting and Management, 10(1), 57-74.

Ajibike, J.O. and Aremu, O. S. (2015). The impact of liquidity on Nigerian bank performance: A dynamic panel approach. Journal of African Macroeconomic Review, 5(2),23-41.

Akinyomi, O.C. (2014). Effect of cash management on profitability of Nigeria manufacturing firms. International Journal of Marketing, 4 (1), 129-140.

Alice, G., (2015). The effect of bank size on profitability of commercial banks in Kenya. An unpublished research project submitted in partial fulfillment f the requirements for the award of the degree of Master of Science Finance, school of business, University of Nairobi.

Alice, M. & Mulyungi, P. (2018). Effect of cash management on the financial performance of cooperative banks in Rwanda: A case of Zigma CSS. Invention Journal of Research Technology in Engineering & Management (IJRTEM) 2 (5) 88-98.

Amahalu, N. & Ezechukwu, B. (2017). Effect of firm characteristics on financial performance of quoted deposit money banks in Nigeria. /Download.

Amah, K. O., Michael, C. E. & Ihendinihu, J.U. (2016). Relationship of cash flow ratio and financial performance of listed banks in emerging economics- Nigeria example. European Journal of Accounting, Auditing and Finance Research, 4 (4), 89-97.

Babalola, Y. A., (2013). The effect of firm size on firms profitability in Nigeria. Journal of Economics and Sustainable Development.

Bassey, G. E. & Moses, C. E. (2015). Bank profitability and liquidity management: A case study of selected Nigerian deposits money banks. International Journal of Economics, Commerce and Management United Kingdom, III (4).

Central bank of Nigeria (CBN) annual statistical bulletin 2018, 2019/FPRD/Copy%20of%20DMBs%20DATABASE%20AS%20AT%20JULY%2019,%202019.pdf. Retrieved 19/07/2019.

Chandekar, M. G., & Khedkar, A. M. (2014). Role of cash management system in banking sector. Research Journal of Management Sciences 3(12),15-17.

Duncan, N. M., Njeru, A., Member, F., & Tirimba, O. I. (2015). Effect of cash management on financial performance of deposit taking SACCOs in Mount Kenya Region. International Journal of Scientific and Research Publications, 5(2),

Edem, D.B. (2017). Liquidity management and performance of deposit money banks in Nigeria (1986–2011): An investigation. International Journal of Economics, Finance and Management Sciences. 5(3), 146-161. DOI: 10.11648/j.ijefm.20170503.13

Emenike, K. O. & Obasi, R. (2016). Long-run relationship between marketing of bank services and the performance of deposit money banks in Nigeria. International Journal of Economics, Business and Management Studies, 3(1), 12-20.

Enders, W. (2004). Applied Econometric Time Series (2nd Ed.). Singapore: John Wiley & Sons (ASIA) Pte Ltd.

Gemechu, A. S. (2016). Determinants of banks’ profitability: Evidence from banking industry in Ethiopia. International Journal of Economics, Commerce, and Management, United Kingdom iv (2), 442.

Idowu, A. A, Essien, J. M. & Adegboyega, R. (2017). Liquidity management and banks performance in Nigeria. Issues in Business Management and Economics, 5 (6), 88-98.

Kalu, E.O., Shieler, B & Amu, C.U. (2018). Credit risk management and financial perfomance of microfinance institutions in Kampala, Uganda. Independent Journal of Management & Production, 9(1), 153-169.

Kutsienyo, L. (2011). The determinant of profitability of banks in Ghana. A Thesis submitted to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of Commonwealth Executive Masters of Business Administration (CEMBA).

Kwadwo, B. (2018). Determinants of bank profitability: A comparative study of Indian and Ghanaian banks. Journal of Emerging Technologies and Innovative Research (JETIR); 5(5) 643-654.

Masonson, L. (2010). How to manage the business cash flow effectively. Retrieved June 12, 2019,

Milne, M. J. & Adler, R. W. (1999): Exploring the reliability of financial disclosures content analysis. Accounting, Auditing and Accountability Journal, 12(2), 237-256.

Minnick, K., & Noga, T. (2010). Do corporate governance characteristics influence tax management? Journal of Corporate Finance, 16, 703-718

Mohammad, S. A. (2015). The impact of bank size on profitability “An empirical study on listed Jordanian commercial banks.” European Scientific Journal December 11(34).

Ongore, V. O. & Kusa, G. B. (2013). Determinants of financial performance of commercial banks in Kenya. Int. J. Econ. Finance. Issues3.

Salawu, R. O., & Adedeji, Z. A. (2017). Corporate governance and tax planning among non-financial quoted companies in Nigeria. An international multi-Disciplinary Journal, Dahir Dar, Ethiopia, 11 (3), 42-59.

Sameh, C.K., & Jamel, E.C. (2013). Bank size and efficiency in developing countries: intermediation approach versus financial value-added approach and impact of non-traditional activities. Asian Economic and Financial Review, 3(5):593-613.

Sanyaolu, O. A., Adesanmi, A.D., Imeokparia, L., Sanyaolu, A. O., and Alimi, A. (2017). Corporate governance and financial performance of quoted deposit money banks in Nigeria. International Journal of Social Science and Economic Research, IJSSER; 02(08).

Shawar, K. (2019). Factors affecting financial performance of insurance industry in Pakistan. Research Journal of Finance and Accounting, 10 (5).

Smirat, B. Y. AL (2016). Cash management practices and financial performance of small and medium enterprises (SMEs) in Jordan. Research Journal of Finance and Accounting, 7(2).

Uwuigbe, U. (2011). Corporate environmental reporting practices: A comparative study of Nigerian and South African firms. Ph.D. thesis submitted to the school of postgraduate studies Covenant University, Ota, Nigeria.

Wolfing, D. & Moormann, J. (2018). Cash management in transition: From cash management to cash process management. Frankfurt School of Finance & Management.



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

AFRE (Accounting and Financial Review)

Postgraduate - University of Merdeka Malang

Postgraduate  Building, Terusan Dieng Street 62-64
Malang City, East Java, Indonesia, 65146.

View My Stats      Web

Other Link

Follow Us

Site Home Journal
Unmer Malang
(0341) 567617
 Fax(0341) 567617

AFRE (Accounting and Financial Review)  Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.