Cash Flows, Firm Characteristics and Net Interest Margin of Listed Deposit Money Banks in Nigeria

Abstract

This study examined the effect of cash flow which include operating, investing and financing on Net Interest Margin, seen as performance of listed deposit money banks in Nigeria.  Data for the study were collected from the annual reports of the banks used as an adjusted population due to criteria set for the study for the period 2008 to 2018.  The study utilised panel regression analysis where panel corrected standard error model was employed due to the presence of heteroscedasticity in the model in relation to Net Interest Margin NIM seen as performance model. The study found that both operating and financing cash flows have positive and significant effect on Net Interest Margin NIM among the banks in Nigeria. However, the study could not establish any relationship between investing cash flow and Net Interest Margin NIM of banks in Nigeria. Therefore, it is recommended that more attention be paid to both operating and financing cash flows as it influences the Net Interest Margin NIM which could lead to more Net Interest Margin of listed deposit money banks in Nigeria positively.

Keywords: Cash Flow, Financing, Investing, Operating, Net Interest Margin

DOI: 10.7176/RJFA/12-10-06

Publication date:May 31^st 2021