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IMPACT OF LIQUIDITY MANAGEMENT ON THE PERFORMANCE OF INSURANCE COMPANIES IN NIGERIA

Abstract: The study investigated the impact of liquidity management on financial performance of insurance companies in Nigeria between 2003 and 2012. The study made use of variables such liquid asset, equity capital, dividend, working capital, investment, under-writing risk and size of the firm in the model. Return on asset ROA is used as the dependent variable and it measures the financial performance. Panel Regression analysis was adopted to estimate the model and the results showed that liquidity management has not been having significant impact on insurance company’s performance like equity management which affects long term stability. Again, both investment and working capital are shown to have significant positive impact on financial performance of insurance companies in Nigeria. It is recommended that insurance companies should place more priority on their equity capital which is having negative impact on their performance rather than liquidity management since they are less involved with liquid cash unlike commercial banks.

Keywords:  Liquidity management, Financial Performance, equity capital

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