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Bank-Specific Factors and the Liquidity of Commercial Banks: Evidence from Nigeria

Elias I. Agbo, E. Chuke Nwude

Abstract


The study investigates the effect of bank-specific factors on the solvency of deposit money banks from 2001 to 2015. The ordinary least squares statistical technique was used to run the regression after confirming the normality and stationarity of the time-series data through the unit root, cointegration,  kurtosis and other relevant diagnostic tests. The bank-specific factors studied include total capital ratio, impaired loans on total loans, interest expense over deposits, return on equity, return on assets and total banking assets over total banking sector assets.  The results show that total capital ratio, impaired loans on total loans, return on equity and total banking assets over total banking sector assets have negative and statistically insignificant effect on banks liquidity at five percent significance level.  On the other hand, return on assets and interest expenses over deposits have positive and statistically insignificant impact on bank liquidity.


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