IMPACTS OF LIQUIDITY INDICATORS ON THE FINANCIAL PERFORMANCE OF PRIMARY MORTGAGE BANKS IN NIGERIA

Abstract

Nigeria's financial landscape has changed dramatically over time due to the growth of numerous financial institutions and the increasing demand for liquidity, which, in the context of this study, refers to a financial institution like a primary mortgage bank's capacity to fulfill its short-term financial obligations as they become due. By examining the connection between liquidity metrics and the financial performance of Nigeria's leading mortgage banks, this study seeks to broaden the body of empirical data in the industry. Using an ex-post facto research design, this study examines data from a purposive sample of five major mortgage banks between 2013 and 2024. The study uses a panel regression model for analysis, with net income as the dependent variable and liquidity indicators including total assets, current assets, loans and advances, and total liabilities as independent variables. These results reveal that there was no statistically significant negative correlation between the net income of Nigeria's leading mortgage banks and any of the liquidity measures (total assets, current assets, loans and advances, and total liabilities). This highlights the distinctiveness of the relationship between liquidity indicators and financial performance across banking sectors and calls for context-specific analyzes. Even in cases when liquidity indicators do not significantly affect financial performance, the study emphasizes the significance of diversifying investment strategies for primary mortgage banks. This study adds significant knowledge to the banking industry in developing nations, especially in Nigeria. The results showed that total assets, current assets, loans and advances, and total liabilities did not significantly impact financial performance; therefore, major mortgage banks should consider diversifying their investment strategies. Investigating other investment choices or altering the distribution of assets might boost overall profitability.