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Corporate Tax and Liquidity of Deposit Money Banks in Nigeria

Author

Listed:
  • Suleiman Ahmed Hadiza

    (Department of Accounting, Faculty of management sciences, Usmanu Danfodiyo University, Sokoto State, Nigeria)

  • Mohammed Garba Abubakar

    (Federal Government Collage, Sokoto State, Nigeria)

Abstract

This paper assesses the effect of corporate tax and liquidity of listed deposit money banks in Nigeria from 2018 to 2022.The entire fourteen listed DMBs served as population of the study. Data are obtained from annual reports and accounts of these banks. The study used descriptive statistics, inferential statistics, and correlation analysis. While panel generalized least square regression was used to analyze the dependent variable, liquidity, measured by cash ratio and independent variable corporate tax, measured by effective tax rate and tax expense, while control variables used was bank size. The result reveals that, effective tax rate has significant negative effect on liquidity at a coefficient of (-0.1245) and a significant p-value of (0.0436) and tax expense has a significant negative effect on liquidity with a coefficient value of (-0.1065) and a p-value of (0.0394). On the other hand, the control variable bank size indicated a positive significant effect on liquidity with a coefficient value of (2.9703) and a p-value of (0.0028) among listed DMBs in Nigeria. The study recommends that, tax authorities should review the current corporate tax policy and come up with more favourable policy that will increase the liquidity of listed DMBs in Nigeria. This will improve bank’s patronage and thereby encouraging the banking sector’s growth and development.

Suggested Citation

  • Suleiman Ahmed Hadiza & Mohammed Garba Abubakar, 2024. "Corporate Tax and Liquidity of Deposit Money Banks in Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 11(7), pages 896-908, July.
    • Handle: RePEc:bjc:journl:v:11:y:2024:i:7:p:896-908
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    References listed on IDEAS

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    1. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    2. Akinleye Gideon T. & Olarewaju Odunayo M. & Fajuyagbe Samson B., 2019. "Assessing the Effects of Corporate Taxation on the Investment Policy of Manufacturing Firms in Nigeria," Folia Oeconomica Stetinensia, Sciendo, vol. 19(2), pages 7-24, December.
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