CASH FLOW MANAGEMENT AND FINANCIAL PERFORMANCE: THE EXPERIENCED OF NIGERIAN DEPOSIT MONEY BANKS

Abstract

The study explored the influence of cash flow management on the performance of Nigerian Deposit Money Banks. The data were sourced from the Nigerian Exchange Group and annual reports of fifteen listed banks over a six-year period (2018-2023). The research focused on operating cash flow, financing cash flow, and investing cash flow as independent variables, with return on assets (ROA) as dependent variable. The study conducted the fixed effect model of the panel least square regression resulting from the Hausman test. The findings revealed that operating cash flow negatively and significantly affects ROA, financing cash flow positively but insignificantly influences ROA, and investing cash flow has a negative yet insignificant impact on ROA. The study concludes that cash flow management plays a pivotal role in shaping the performance of Nigerian Banks, highlighting the need for focussing on optimizing core operational activities through an improving efficiency in revenue generation, minimizing operational costs, and by prioritizing internal funding sources (e.g., retained earnings) and consider external financing (e.g., debt issuance) only when necessary.