INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) DISCLOSURE AND LIQUIDITY OF DEPOSIT MONEY BANKS (DMBs) IN NIGERIA

AKINGBADE RUKAYAT; AKINBODE, FEYISAYO AANUOLUWAPO; BILEWU, OLUKAYODE ABIODUN; OMOBA, OPEYEMI OMOTOLA

doi:10.70382/mejfrbd.v9i7.047

Authors

AKINGBADE RUKAYAT

Deloitte Tax LLP, Deloitte USA
AKINBODE, FEYISAYO AANUOLUWAPO Department of Accounting, Olabisi Onabanjo University, Ago-Iwoye, Nigeria
BILEWU, OLUKAYODE ABIODUN Department of Accounting, Olabisi Onabanjo University, Ago-Iwoye, Nigeria
OMOBA, OPEYEMI OMOTOLA Department of Accounting, Olabisi Onabanjo University, Ago-Iwoye, Nigeria

Abstract

The research focused on assessing the impact of International Financial Reporting Standards (IFRS) disclosure on the liquidity of Deposit Money Banks (DMBs) in Nigeria following its adoption. A deliberate selection of ten out of the fifteen quoted banks in Nigeria was made for the analysis, examining their financial statements spanning from 2015 to 2019. Panel data analysis was employed to determine the statistical significance of IFRS disclosures in relation to the liquidity of these banks. Results from the analysis revealed that liquidity ratios such as Liquidity Ratio, Non-Performing Loan Ratio, Cost to Income Ratio, and Loan to Deposit Ratio were significant independent predictors of IFRS disclosures. As a result, the null hypotheses (Ho1, Ho2, Ho3, and Ho4) were refuted. The findings indicated that the adoption of IFRS disclosures is not random, as evidenced by the coefficient values (0.3265, 0.0379, -0.0213, -0.0719) and probability values (0.000, 0.588, 0.538, 0.298), suggesting that an increase in Liquidity Ratio, Non-Performing Loan Ratio, leads to improved liquidity in Nigerian Deposit Money Banks while an increase in Cost to Income Ratio, and Loan to Deposit Ratio leads to decrease in liquidity of Nigerian Deposit Money Banks. At a significance level of 5%, the evidence from the study demonstrates that IFRS disclosures significantly influence the Liquidity Ratio, Non-Performing Loan Ratio, Cost to Income Ratio, and Loan to Deposit Ratio of Deposit Money Banks in Nigeria. Therefore, the study concludes that the adoption of International Financial Reporting Standards (IFRS) disclosures has a substantial impact on the liquidity of DMBs in Nigeria. Consequently, it is recommended that Deposit Money Banks (DMBs) in Nigeria fully embrace and diligently implement International Financial Reporting Standards (IFRS) to optimize their effect on liquidity. Additionally, DMBs should closely monitor financial ratios, given their significant influence on liquidity.