INTERBANK TRANSACTIONS, FINANCIAL PERFORMANCE AND SUSTAINABILITY IN DEPOSIT MONEY BANKS

Abstract

This paper discusses current studies on interbank transactions and the financial performance and sustainability of Nigeria’s deposit money banks (DMBs). Banks’ capacity to absorb liquidity shocks and lend to one another is critical for financial stability and economic development, since strains in interbank transactions may put pressure on non-financial companies and consumers’ financing circumstances, resulting in increased credit risk. The sub-market analysis may be used to determine the performance of other financial markets. The data for DMBs were examined using appropriate statistical methods. In light of the study performed, it can be concluded that interbank transactions have an effect on the financial performance and sustainability of deposit money banks in Nigeria. The research found that, while adhering to regulatory requirements for credit policy, deposit money banks should perceive interbank loans and deposits as less hazardous investment alternatives and thus be prepared to trust one another in order to improve their financial performance.