For correspondence:-
Received: January 01 2023 Accepted: March 25 2022 Published: 11 September 2023
Citation: Credit Risk Management and Financial Performance: An Empirical Study of Deposit Money Banks in Nigeria. Account Tax Rev 2008; 7(1):17-29 doi:
© 2008 The authors.
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Abstract
The relevance of banks to the economy lies primarily in their ability to mobilize credit and grant credit to various economic actors. Credit risks suffered by the banking industry arising from defaults in payment of loans and advances and other credit facilities granted to borrowers by the banks are enormous. There is an increase in challenges to banks posed by incidences of bad debts and other credit risks. It is worrisome to note that the magnitude of non-performing credits is on the increase, thereby making banks lose huge sums of money. The study examines the effect of credit risk management on the financial performance of DMBs (2013-2020). Data were extracted from the annual reports of sampled DMBs. Non-performing loans, & advances revealed a positive significant effect on ROE with (co-efficient 0.0096, 0.0026 and p-values 0.001, and 0.027) respectively. The study concludes that credit risk management has a significant effect on the performance of quoted banks in Nigeria. It therefore recommends that banks should intensify their efforts in ensuring a proper match of loans and deposits to boost their financial performance.
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