Research purpose: The purpose of the study is to look into how financial metrics affect the return on assets of Nigerian deposit money institutions. To precisely ascertain how the liquidity ratio affects the deposit money banks' return on assets (ROA) in Nigeria; Analyse the impact of Nigerian deposit money banks' cash reserve ratio on their commercial return on assets (ROA); and Examine how the loan to deposit ratio affects Nigerian deposit money banks' return on assets (ROA).
Methodology: The ex-post facto research design is used in this study. For the study, secondary data were taken from Nigerian money deposit banks' financial Statement of Accounts. The study utilised a model consisting of descriptive coefficients, multiple linear regression analysis, panel data time series, and cross-sectional data to determine the extent to which the variables tested had an impact on return on asset. The relative statistical tool regression was used to analyse the data.
Findings: The results showed that the liquidity ratio, cash reserve ratio, and loan to deposit ratio were all positive (0.021065; 0.001794) and non-significant (0.5501; 0.9021 > 0.05) respectively on return on asset of deposit money bank in Nigeria. Additionally, the liquidity ratio had a negative (-0.007557) and non-significant effect (0.5072 > 0.05) on return on assets of deposit money banks in Nigeria.
Recommendations: It is advised that banks develop prudent plans for managing their cash reserves in light of the findings. In addition, banks ought to manage their loan portfolios carefully, taking the risk-return trade-off into account. Lastly, banks must ensure that their liquidity is appropriately handled.
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