Liquidity Creation and Financial Performance: Evidence from Deposit Money Banks in Nigeria

Liquidity creation is among the critical role performed by banks. This study examine the relationship between liquidity creation and performance of deposit money banks (DMBs) in Nigeria. The study employed 14 listed DMBs’ in the Nigerian Stock Exchange between the periods 2010 to 2018. The technique of analyses used in the study are the pooled ordinary least square, random effect and fixed effect and all errors are corrected in the final model. The study found a significant and negative relationship between liquidity creation and performance of banks. The study recommend a strong compliance with regulatory capital regulations in order to maintain their vital role of liquidity creation in the economy.