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

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General Information Cached
Title
Cash flow and bank failure predictions: evidence from Nigerian deposit money banks
Type
Article
Main Author
Adeyemi, Zaid Adewumi
Additional Authors
  • Lamidi,Wasiu Adebayo
  • Bamigboye,Omololu Adex
Subject
HG Finance
Language Code
eng
Bibliographic Details
Place of Production
Tanjong Malim
Publisher
Fakulti Pengurusan dan Ekonomi
Year of publication
2022
Degree Type
Not related
Corporate Name
Universiti Pendidikan Sultan Idris

Abstract

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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