- Ehilegbu, Emmanuel Chidozie 1*, Ifeosame, Samuel
- University of Port Harcourt, Port Harcourt, Rivers State, Nigeria
The policy of Treasury Single Account (TSA) took off in 2012 to curb longstanding excessive revenue leakages and fiscal corruption of revenue generating Ministries, Departments and Agencies (MDAs) of the government. Abolition of independent account operation and proliferation favouringa unified bank account also raises the question of banks liquidity position. This paper adds to existing research by assessing the effect of TSA on banks liquid position based on two distinct bivariate models. First, the paper relates TSA to ratio of customer deposits to asset measure of liquidity. Second, it empirically tests the relationship between TSA and loan to customer deposits. Loans, assets, and deposits are sourced from the Central Bank of Nigeria statistical bulletin which are employed to compute for the liquidity metrics. We extended data series and binary numbers to account for TSA. Using Ordinary Least Square (OLS) analytical technique, the study finds evidence of a negative but insignificant relationship between TSA and customer deposit to total assets. Conversely, TSA has positive and significant relationship with loans to total deposits. The study concludes that TSA affects liquidity of the deposit money banks via decline in deposit volume. Lastly, TSA supports liquidity via increase in loans-to-deposits.
