IMPACT OF LIQUIDITY AND LEVERAGE ON SUSTAINABLE GROWTH OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study examined the impact of liquidity and leverage on sustainable growth (SG) of listed deposit
money banks in Nigeria over the period of ten years (2009 – 2018). The data for the study was collected
from the annual reports and accounts of the listed DMBs in Nigeria. In addition to descriptive statistics,
multiple regression techniques were employed to analyze the data. The study nds that leverage has
positive and signicant impact on SG whereas liquidity has insignicant but negative impact on SG of
listed DMBs in Nigeria. Based on these ndings, the study concludes that leverage is an important
determinant of SG. Increase it would signicantly improve the level of SG and also excessive or increase
in liquidity worsen the SG level insignicantly while the sufcient or decrease in liquidity will improve SG
level of listed DMBs in Nigeria. On the basis of this conclusion, the study recommends that banks should
strive to increase the ratio of debt to equity as it is cheaper and improve SG. Banks should maintain
optimum level of liquidity as excessive level of it will negatively affect SG of the bank.