Cash flow and bank failure predictions:  evidence from Nigerian deposit money banks

Adeyemi, Zaid Adewumi

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Type :	article
Subject :	HG Finance
Main Author :	Adeyemi, Zaid Adewumi
Additional Authors :	Lamidi,Wasiu Adebayo Bamigboye,Omololu Adex
Title :	Cash flow and bank failure predictions: evidence from Nigerian deposit money banks

Place of Production :	Tanjong Malim
Publisher :	Fakulti Pengurusan dan Ekonomi
Year of Publication :	2022
Corporate Name :	Universiti Pendidikan Sultan Idris

Abstract : Universiti Pendidikan Sultan Idris

This study examined the influence of cash flow on bank failure prediction in deposit money banks in Nigeria. The study exploited all listed deposit money banks in the Nigerian stock exchange market that have adequate financial reports for a period of ten years, from 2011 to 2020. Data collected were analyzed using descriptive statistics, correlation matrix, and random effect regression model. The study’s findings of the study divulged that net cash flows from investing and financing activities have a positive and considerable influence on bank failure predictions while operating activities such as cash flow have an adverse effect on the likelihood of bank distress prediction. It was also observed that investing and financing activities’ net cash flows are significant cash flow components that predict the likelihood of bank failure and the cash flow model is an effective predictor of bank failure in the Nigerian banking sector. The study recommended that the management of Nigeria’s deposit money banks should monitor the banks’ cash flows and continue to sustain or further increase the current net cash flow from investing and financing activities since these cash flow components have a significant impact on their survival.

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