A Corporate Governance and Bank Liquidity Creation in Nigeria:Panel Vector Error Correction

Abstract

The study surveyed the influence of sound corporate governance on banks’ liquidity creation in Nigeria using secondary data gleaned from annual reports and accounts of five (5) quoted Deposit Money Banks (DMBs) in Nigeria between 2013 and 2019. The obtained data were subjected to several preliminary and inferential statistical analyses, and the results of the descriptive statistics and PVEC Model revealed that all the specified indicators of Corporate Governance, for example, Board Size, Board Independence, and Audit Committee, exert a positive influence on banks’ liquidity creation, while only Board Independence and Audit Committee have a significant influence on liquidity creation of the selected banks. Thus, the study suggested that bank managers and policymakers must ensure that DMBs continuously design and implement effective corporate governance mechanisms to enhance their liquidity.