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ABSTRACT
The study examines the effect of liquidity on the financial performance of insurance firms listed on the Nigerian stock market using secondary data that was collected from annual reports and accounts of Fifteen (15) insurance companies sampled over the period of ten years from 2010 to 2019. The static panel data analysis technique is used to examine the impact of liquidity on insurance firm’s performance. Liquidity is measured using current ratio and debt ratio whereas financial performance is measured using Return on Asset (ROA). The results reveal a significantly positive relation between current ratio and financial performance. On the other hand, the results also reveal that debt ratio has a significant negative relationship with financial performance. Overall, the study concludes that liquidity influence the financial performance of the listed insurance firms in Nigeria during the period under review. The study recommends that insurance firms should deploy effective internal control systems that could strengthen the liquidity fundamentals of the firms. More specifically, tighter systems or controls on debt management should be rooted for.
