Exploring the Role of Financial Assets in Enhancing the Performance of Nigerian Banks
DOI:
https://doi.org/10.55208/aj.v4i2.148Keywords:
Assets, Performance, Cash, Trade Receivables, LoansAbstract
The study looked at the impact of financial assets (FA) on the financial performance (FP) of Nigerian deposit money banks (DMBs) from 2013 to 2022 (10 years). The study's specific goal is to investigate the coexistence of financial asset measurements [Cash Equivalents (CE), Trade Receivables (TR), Loans and Advance (LAD), and Foreign Bank Deposit (FBD)] and [DMB FP as proxied by Return on Equity (ROE)]. The selected ten banks were picked from the pool of 18 deposit money banks listed on the Nigerian Exchange Group. They were examined through descriptive statistics, correlation analysis, and multiple regression analysis utilizing the OLS method. The findings indicated that capital equity (CE), liquidity asset density (LAD), and financial burden debt (FBD) have minimal impacts on return on equity (ROE); however, total revenue (TR) has a significant impact on ROE. Ultimately, the research revealed a strong correlation between financial assets (FA) and financial performance (FP) of deposit money banks in Nigeria. It is recommended that managers in the banking industry boost their allocation of cash holdings through cash planning (estimated forecast of cash position in the future) in order to maintain an optimal cash position level and improve their FP. Furthermore, treasurers must plan to invest idle capital in short-term investments such as treasury bills and interbank lending, which increases profitability and reduces fund costs.
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