EFFECT OF TREASURY SINGLE ACCOUNT ON LIQUIDITY OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

Authors

  • Anyadufu Anthony Onyeka Anambra State Polytechnic, Mgbakwu
  • Udeachu Peter Izuchukwu Anambra State Polytechnic, Mgbakwu

Keywords:

Liquidity, Current ratios, Treasury single account

Abstract

The study presents empirical evidence on the effect of Treasury Single Account on liquidity in the Nigerian banking industry using annual financial report data for the period 2009-2019. The study used proxy variables which include current ratios, liquidity coverage ratio and loan to deposit ratio to ascertain the relationship between liquidity and TSA. Earlier studies on this subject lacked empirical support for the hypothesis that TSA and bank liquidity is related. Ex-post facto study design was employed by the investigator. Nigerian commercial banks that were mentioned made up the target population. Secondary data taken from annual reports of the banks under examination was used in the study. The study compared the impact of TSA before and after adoption, using a time series analysis. The data were examined using descriptive statistics and the Paired Samples t test to compute data from line and bottom line items in financial statements. The analysis showed t value of -1.283 with significance of 0.269 which is more than 0.05; t value of -4.188 with significance of 0.014 which is less than 0.05 and t of -1.926 with significance of 0.126 which is more than 0.05 was gotten for current ratio, Liquidity coverage ratio and loan-deposit ratio. In contrast to most of prior empirical studies and claims, the adoption of the Treasury Single Account policy had a major impact on borrowing culture but no discernible effect on the loan-deposit ratio or current ratio. The report states that in order to ensure the banks' continued existence and growth, TSA reorganises them to diversify into new investment opportunities and enhance their marketing strategies. The report suggests that DMBs should examine their own operations to ensure they are fulfilling the primary duties for which they were granted licences. They should also develop aggressive marketing strategies to find liquid assets and boost their investments, since doing so would help them keep their liquidity.

Author Biographies

Anyadufu Anthony Onyeka, Anambra State Polytechnic, Mgbakwu

Anyadufu Anthony Onyeka, Anambra State Polytechnic Mgbakwu

Udeachu Peter Izuchukwu, Anambra State Polytechnic, Mgbakwu

Udeachu Peter Izuchukwu, Anambra State Polytechnic Mgbakwu

Downloads

Published

2022-10-28