Mountain Top University Library

This study examined the impact of macroeconomic variable on liquidity management of Nigerian
deposit money banks. The research population consist of 22 deposit money banks in Nigeria.The
list of deposit money banks was drawn using stratified random sampling based on the criteria of
banks with international authorization. The study adopted the ex post facto research design, the
study is based on the arbitrage pricing theory (APT) propounded by Ross (1976). The study made
use of secondary data extracted from the semi-annual audited report of the five banks respectively
and central bank statistical bulletins from the period of 2011-2020. The study used regression and
correlation analysis to test the relationship between inflation rate, interest rate, exchange rate and
liquidity management of deposit money banks, liquidity ratio is used to represent the liquidity
management of deposit money banks. The findings showed that the inflation rate showed a positive
and insignificant relationship with liquidity ratio, exchange rate showed a negative and significant
relationship but insignificant relationship at significant level. The independent variables jointly do
not have a significant relationship or impact on liquidity ratio of deposit money banks in Nigeria.
This is because the value is more than the significant benchmark. The study recommends that the
deposit money bank should come out with products that will help them in hedging against
exchange rate so as not to adversely affect their profitability. And the central bank as the regulatory
authority should come out with better inflation expectation methodology executive inflation
eroding the capacity of the banks to make more profit.