Effect of Operational Capital Management on Economic Performance of Nigerian Banking Sector

This study conducted the effect of working capital management on financial performance of listed deposit money banks in Nigeria. Working capital is a very important element for the sustainability of an organization like deposit money banks. During the assessment the focus was on evaluating working capital through key indicators such as the current ratio, ratios of cash to deposits as well as loans to deposits. Moreover, metrics like Return on Equity (ROE) and Return on Asset (ROA) were employed to evaluate financial performance. An expost-facto research design was employed. The study population comprised of twenty-two deposit money banks out of which only 10 were purposively selected for sampling. Secondary data was utilized, and financial statements spanning a period of 10 years (2013 – 2022) were scrutinized. Panel Ordinary Least Square (OLS) was employed as a technique for data analysis. The results demonstrated that working capital had a considerable impact on ROE (p=0.000024 0.05) and ROA (p=0.000001 0.05). Thus, the study came to the conclusion that working capital significantly affects financial. Hence, it was recommended that banks in Nigeria should look for a way of balance between working capital and financial performance.