ASSET-LIABILITY MANAGEMENT AND PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

The increasingly complex structure of modern banking has made effective asset-liability management (ALM) indispensable to the profitability, liquidity, solvency and long-term sustainability of deposit money banks. This study examines the effect of asset-liability management on the performance of deposit money banks in Nigeria over the period 2003–2024. Specifically, asset-liability management is represented by debt-to-assets ratio (DAR) and debt-to-equity ratio (DER), while bank performance is measured by return on assets (ROA) and return on equity (ROE). Secondary data were obtained from the annual financial reports of four selected deposit money banks—Access Bank Plc, Zenith Bank Plc, United Bank for Africa Plc and First Bank of Nigeria Limited—and other secondary financial data sources. The study adopts a quantitative longitudinal research design and applies the Augmented Dickey-Fuller unit-root test and the Autoregressive Distributed Lag (ARDL) estimation framework. Diagnostic tests for heteroskedasticity and serial correlation were also considered in evaluating the reliability of the estimated models. The empirical results reveal that debt-to-assets ratio exerts a positive and statistically significant effect on both return on assets and return on equity. Conversely, debt-to-equity ratio exhibits a negative but statistically insignificant effect on both performance indicators. The estimated models are jointly significant and explain substantial proportions of the variations in bank profitability. The findings suggest that the performance implications of bank financing structure depend not merely on the volume of liabilities employed but, more importantly, on the manner in which such liabilities are matched with productive assets and supported by an appropriate capital structure. The study concludes that effective asset-liability management is an important determinant of the financial performance of Nigerian deposit money banks. It recommends stronger asset-liability governance, prudent leverage management, continuous balance-sheet stress testing, stronger capital adequacy oversight and more proactive regulatory supervision of maturity, liquidity and funding mismatches.