Effect of Treasury Single Account (Tsa) on Deposit Money Banks’ Liquidity Performance in Nigeria

Abstract

This paper investigated effect of Federal Government of Nigeria (FGN) Deposit Withdrawals into the Treasury Single Account (TSA) on Deposit Money Banks’ liquidity performance in Nigeria. Secondary data were obtained from [7] Central Bank of Nigeria (CBN) Statistical Bulletin covering pre and post implementation years (2012 to 2017). The dependent variable was represented by Deposit Money banks’ liquidity ratiowhile the independent variable was represented by Federal Government Deposits at the Deposit Money Banks. The study used correlational research design to determine the effect of TSA on Deposit Money Banks’ liquidity in the country. Also, the study employed Feasible Generalized Least Square (FGLS) technique of data analysis. It was then found that Federal Government Deposit (FGD) had a positive and significant effect on the Deposit Money Banks’ liquidity position in the Pre-TSA Era whereas Federal Government Deposit (FGD) had a negative and significant effect on the Deposit Money Banks’ liquidity performance in the Post-TSA Era. It was therefore recommended that the Nigerian Government should consider the hybrid TSA model as a way of boosting the Deposit Money Banks (dmbs) liquidity position. It was then suggested that further researchers could widen the scope by including factors such as GDP, Exchange Rate, Inflation Rate excluded in this study. Key Words: Treasury Single Account (Tsa), Feasible Generalized Least Square (Fgls), Liquidity

A Study of the Effect of the Treasury Single Account on Commercial Banks Deposits and Lending in Zambia

“…The regression results further revealed that, while foreign and state-owned banks were more resilient, private, and domestic banks' performance deteriorated after TSA adoption. The findings are consistent with the finding by (Ajetunmobi,et al,017), (Muraina, 2018), (Mwambuli & Igoti, 2021), and (Ndubuaku, et al, 2017) whose finding revealed that the TSA had a negative impact on performance of banks. (Mawalla, 2023) examined the Implications of the Treasury Single Account (TSA) on Tanzanian Banks focusing on profitability, efficiency, and stability, using Return on Assets (ROA), Return on Equity (ROE) and Non-Performing Loans (NPL) as performance parameters.…”

“…Ultimately, this withdrawal of Government Deposits impacts negatively on their lending ability since banks need deposits (liabilities) to provide Loans and Advances. The findings are in agreement with the findings of the studies done by (Kanu, 2016), (Muraina, 2018), (Mwambuli & Igoti, 2021), (Ajetunmobi, et al, 2017), (Ndubuaku, et al, 2017), and (Mkaro, et al, 2023) whose findings revealed that the TSA impacts negatively on the performance of the banking sector. These findings point to Commercial Banks' reliance on Government Deposits, to Mobilize Deposits and thus provide lending.…”

“…The study also found that there is significant difference in the Profit after Tax (PAT) of banks before and after the adoption of TSA. (Muraina, 2018) carried further studies on the effects of the TSA on Deposit Money Banks's Liquidity Performance in Nigeria. Secondary data on liquidity ratios and Total Federal Government of Nigeria Deposits from twenty-two ( 22) Deposit Money Banks were collected through the Central Bank of Nigeria.…”