CREDIT RISK MANAGEMENT AND DEPOSIT MONEY BANKS’ PERFORMANCE IN NIGERIA

Abstract

This study examines the impact of credit risk management on the performance of commercial banks in Nigeria. This is necessitated by the growing concern on how loans have exposed banks to the greatest level of risk. The scope of this study covers the period of 2012 – 2019; and is limited to the following credit risk management variables such as; non-performing loans, loan loss provision and liquidity ratio. The study used secondary sources of data obtained from published annual reports of selected commercial banks and adopted panel data regression analytical model in the analysis of collected data. The results of the analysis show that credit risk management has a significant impact on the performance of commercial banks in Nigeria. Therefore, based on the findings of the study it is pertinent that management of deposit money banks carefully assess the risks inherent in the loan applications before approval. The study recommends that banks should maintain minimum level of non-performing loans; maintain stable liquidity rate; and maintain an appropriate level of loan loss provision that would enhance return on assets and strengthen their financial performance.