Authors: Ebe, E.C., Oti, C. A, Adoyi, K. A., Nsoke, U.P, Mbah, G.A., Nwankwo, E. C.
Abstract: The sustenance of effective corporate performance across industries remains a major concern to stakeholders, particularly in the banking sector where liquidity management influences financial stability and market valuation. This study examined the effect of liquidity management on the share price of selected deposit money banks in Nigeria over the period 2013–2025. An ex-post facto research design was adopted, using secondary data obtained from the annual financial statements and accounts of five selected deposit money banks, resulting in 75 balanced panel observations. Share price served as the dependent variable, while current ratio (CUR), quick ratio (QR) and cash ratio (CAR) represented the independent variables. The Levin, Lin and Chu panel unit-root test confirmed that all variables were stationary at level, while panel least-squares regression was employed for hypothesis testing. The findings revealed that current ratio had a positive and significant effect on share price (β = 0.638, p = 0.0000), explaining 33.49% of its variation. Quick ratio also exerted a positive and significant effect (β = 0.575, p = 0.0002), explaining 25.86% of share-price variation. Conversely, cash ratio had a significant negative effect (β = −0.810, p = 0.0103), explaining 12.94% of the variation. The study concludes that liquidity management significantly affects bank share prices, although the direction depends on the liquidity measure. The study implies that bank managers should balance liquidity with profitable resource utilisation, while investors and regulators should closely monitor liquidity indicators. The study recommends maintaining optimal current and quick liquidity while avoiding excessive cash holdings, and encourages future research to incorporate profitability, capital adequacy, leverage, dividends and macroeconomic variables.
DOI: http://doi.org/10.5281/zenodo.22056178
