TREASURY SINGLE ACCOUNT POLICY AND BANKS LIQUIDITY: A STUDY OF DEPOSIT MONEY BANKS IN LAPAI TOWN-NIGER STATE

Abstract

Public sector funds make up a larger part of the Deposit Money Banks (DMBs) money for
safekeeping in Nigeria. This huge amount of money will leave the custody of the banks due to the
implementation of Treasury Single Account (TSA) policy by the Federal Government of Nigeria
in year 2015. The action by the government is affecting liquidity position of the banks in
Nigeria. The objective of this study is to examine the effect of TSA policy on the liquidity of
DMBs in Nigeria. The study used cross sectional research design. The population of study is two
DMBs operating in Lapai town-Niger State in Nigeria. Copies of 25 questionnaire instrument
were distributed for data collection. Primary data were sourced from 25 respondents who are
management staff of First Bank PLC and United Bank for Africa PLC, Lapai Branches in the
year 2018. The regression result shows that TSA has positive and significant effect on liquidity of
DMBs. The research concludes that TSA significantly affect the liquidity position of banks, which
in turn affect sustainability of Nigeria economy, as banks are bedrock of economic growth and
development of a nation. The study recommends that the Federal Government of Nigeria should
discontinue with the implementation of its TSA policy as it affects the banks liquidity and
sustainability of Nigeria economy growth and development.