The Effect of Working Capital Management on Profitability of Deposit Money Banks in Nigeria: A Case Study of First Bank PLC

Abstract

The importance of working capital management to the going concern of financial institutions is very crucial. This paper examines the effectiveness of working capital management by banks in Nigeria using the oldest and biggest bank in the country as the case study. It conducts a time series analysis over thirty-five years (1981-2015) and observes that cash conversion cycle does not explain the relationship as much as using debt collection and creditors payment as separate variables in a single regression. The study opines that accessibility to long term funds will boost efficient working capital management and also enhance banks profitability.