BOARD DYNAMICS, FINANCIAL RISK MANAGEMENT, AND CASH HOLDINGS: EVIDENCE FROM LISTED NIGERIAN DEPOSIT MONEY BANKS

Abstract

This study was conducted to investigate how board dynamics interact with risk management to affect the cash holdings of listed deposit money banks (DMBs) in Nigeria. A balanced panel of 120 firm-year observations of 12 listed banks was analyzed based on 10-year window of analysis (2015-2024) using a fixed-effects regression technique, and ex post facto research design. In the empirical analysis, the findings show that both board gender diversity and meetings have significant and positive direct effects on bank cash holdings. Importantly, the interaction model supports the negative and significant moderation effect of the interaction between board gender diversity and cash retention, as predicted by liquidity risk. This study adds to the literature by combining two theories, agency and resource dependence theories in a single liquidity framework in sub-Saharan Africa. The novelty is on the one hand in the departure from the linear approach of the traditional paradigms, and on the other hand, in the creation of a tripartite moderated framework, thus showing that the credit and liquidity risks act as active moderators that substantially change the behavior of the members of the boards of directors and the strategies of asset protection in times of macroeconomic shocks.