IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 9 NO. 4 2023
DOI: https://doi.org/10.56201/ijbfr.v9.no4.2023.pg1.22

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Credit Risk Management and Deposit Money Banks’ Performance in Nigeria

Ejem, Chukwu Agwu , Okore, Chinedu Samuel , Effe-Nnamdi, Ann Chinenye

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Abstract

This study examined the relationship between credit risk management and performance of deposit money banks in Nigeria. It was mainly conceived to unravel the causes of the incessant loan delinquencies and its resultant effect on the performance of deposit money banks in Nigeria, despite the various credit policies used by the monetary authorities to curtail them. To achieve this study, data for empirical analysis were sourced from the Nigerian deposit insurance cooperation spanning from 1990 to 2020. Error Correction Mechanism was employed to estimate the various models specified. It was found among others that non-performing loans (credit risks) exert significant impact on bank performance within the period of the study, while average liquidity ratio insignificantly relates to bank performance within same period. In the light of the above findings, the researchers recommend among others that the monetary authorities should intensify their regulatory as well as their supervisory role as it concerns the reduction of the volume of bad loans granted by banking system in Nigeria. Also, that deposit money banks should adopt a workable credit policy to forestall delinquent loans.

keywords:

Non-performing Loans, Liquidity Risk, Bank Performance, ECM, Nigeria

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References:

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Adeniyi O.M. (2006). Bank credit and economic development in Nigeria. Nigerian journal of
Business Education. 1(2).
Ahmadyan, A. (2018). Measuring credit risk management and its impact on bank performance in
Iran. Marketing and Banking Research, 5(2018), 168-183.

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