IIARD International Institute of Academic Research and Development

JOURNAL OF PUBLIC ADMINISTRATION AND SOCIAL WELFARE RESEARCH (JPASWR )

E-ISSN 2504-3597
P-ISSN 2695-2440
VOL. 10 NO. 4 2025
DOI: 10.56201/jpaswr.v10.no4.2025.pg85.98

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Credit Risk Management and the Performance of Commercial Banks in Nigeria (2009-2023)

Linus Egwu Ele, Nwafor, Ifeanyi Nwankwo, Godwin Arome Ocheni

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Abstract

This research work investigated the effect of credit risk management on the performance of commercial banks in Nigeria, the researchers’ specific objectives were to investigate the effect of non-performing loan on the performance of commercial banks in Nigeria, to ascertain the effect of loan loss provision on the performance of commercial banks in Nigeria, and to determine the effect of cash reserve ratio on the performance of banks in Nigeria. The study adopted ex post facto research design and employed the ordinary least squares (OLS) regression technique to analyze the data. The findings showed that loan-loss provision has positive significant effect on the performance of commercial banks in Nigeria (the p-value is 0.0000 while the t-statistic is 7.922521), cash reserve requirement has positive significant effect on the performance of commercial banks in Nigeria (the p-value is 0.0001 while the t-statistic is 6.125682), and there is positive but insignificant effect of non-performing loans on the performance of commercial banks in Nigeria (p-value is 0.2551 while the t-statistic is 1.207419). based on the findings, the researchers made the following recommendations: the banks should adopt a coordinated credit recovery scheme to reduce the effect of the non-performing loans on the banks, the banks should keep the loan loss provisioning moderately low as it will free up more capital available for other bank credit operations and enhance performance, and the central bank should ensure to adopt a marginal reduction in the reserve requirement in order to enhance the credit creating capacities of the banks and improve their performances.

keywords:

Credit risk, Credit risk management, Deposit money banks performance

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