COMMERCIAL BANKS’CASH HOLDINGS BEHAVIOUR IN THE PRE AND POST ECONOMIC RECESSION PERIOD IN NIGERIA: X-RAYING THE DETERMINANTS
Keywords:
Cash holding decisions, Financing activities, Investing activities, Investments,, Systematically Important BanksAbstract
This study to empirically evaluates the effect of the adopted determinants on the cashholding
behaviour of selected Commercial Banks in the pre and post recession period
of Nigeria. Specifically, it intends to ascertain the extent to which Investing activities
and Financing activities affect Cash holdings of Systematically Important Banks (SIBs)
in the pre and post recession periods of Nigeria. It also intends to determine the extent
of relationship between investments of SIBs in Nigeria and the volume of cash held in
the pre and post economic recession periods. Secondary source of data collection was
solely utilised, hence, the adoption of the ex-post facto research design. A total of seven
(7) SIBs in Nigeria were purposively sampled, and extracts from their respective
financial statements for the pre economic recession (2011 - 2014) and post economic
recession (2015 – 2018) periods duly subjected to relevant analyses using Multiple
regression and Spearman Correlation statistical tools. Findings obtained from
analyses showed that Investing activities and Financing activities have significant
effect on the Cash holdings of SIBs in the pre and post recession periods of Nigeria. It
was also discovered that there is a significant relationship between investments of
Systematically Important Banks in Nigeria and the volume of cash held by them in the
pre and post economic recession periods. The study thus concluded that financial crisis
may have changed the cash holding behaviour of SIBs and this is considered to have a
long term effect. The study therefore recommends that Systematically Important Banks
(SIBs) should be accorded reliable assistance by appropriate regulatory agencies into
observing periodic self assessment of their cash holding choices towards ensuring that
such decisions does not in anyway pose significant threat to the organisation’s going
concern in the future. Also, given the magnitude of interest SIBs have in investment,
renewed effort should hence be made at ensuring that such Investments are profitable
ones pursued at manageable risk levels.
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