Asset liability management and performance of deposit money banks in Nigeria and Ghana

Abstract

This study examines the effect of ALM on the performance Return on Assets (ROA) and Return on Equity (ROE) of DMBs in Nigeria and Ghana. The study used ex-post facto research design. The population comprised 18 DMBs licensed in Nigeria and 22 DMBs licensed in Ghana as at 31st December 2021. Purposive sampling technique was adopted to select a sample of 10 DMBs each with relevant data from Nigeria and Ghana. Validated data were obtained from the annual reports of the banks for the period 2007-2021. The reliability of data was premised on the statutory audit and approval of the Financial Statements by the regulatory agencies in Nigeria and Ghana. Data were analyzed using descriptive and inferential statistics. The findings showed that while ALM had insignificant effect on ROA of DMBs in Nigeria (Adj.R2 = 0.297, W(3, 143) = 3.62, p > 0.05) and Ghana (Adj.R2 = 0.372, W(3, 143) = 3.13, p > 0.05), ALM with control variables exerted significant effect on ROA of DMBs in Nigeria (Adj.R2 = 0.296, W(6, 143) = 29.70, p < 0.05) and Ghana (Adj.R2 = 0.394, W(6, 143) = 33.41, p < 0.05). ALM exerted significant effect on ROE of DMBs in Nigeria (Adj.R2 = 0.327, W(3, 146) = 4.17, p < 0.05) and Ghana (Adj.R2 = 0.351, W(3, 146) = 3.68, p < 0.05). ALM with control variables had significant effect on ROE of DMBs in Nigeria (Adj.R2 = 0.293, W(6, 143) = 6.38, p < 0.05) but an insignificant effect on ROE in Ghana (Adj.R2 = 0.337, W(6, 143) = 1.94, p > 0.05).The study concludes that ALM affected performance of DMBs in Nigeria and Ghana. The study recommended that the management of DMBs in both countries should continuously adopt ALM to improve performance. Keywords: Asset liability management, Deposit money banks, Loan deposit ratio, Net interest margin, Return on assets, and Return on equity