CREDIT RISK AND FINANCIAL PERFORMANCE OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

Haruna, Roselyn Afor (), Aruwa, Suleiman Akwu-Odo Salihu () and Olasunkanmi, Musibau Lanre ()
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Haruna, Roselyn Afor: Department of Accounting, Postal: Faculty of Administration,, Nasarawa State University, Keffi, Nigeria., https://www.afarng.org/jfafi/
Aruwa, Suleiman Akwu-Odo Salihu: Department of Accounting, Postal: Faculty of Administration,, Nasarawa State University, Keffi, Nigeria., https://www.afarng.org/jfafi/
Olasunkanmi, Musibau Lanre: Department of Accounting, Postal: Olabisi Onabanjo University, Ago-Iwoye, Nigeria.,, https://www.afarng.org/jfafi/

Journal of Forensic Accounting & Fraud Investigation (JFAFI), 2020, vol. 5, issue 2, 157-194

Abstract: Credit risk is the most significant risk faced by banks, yet the success of the business depends on efficient measurement and management of this risk. Hence, the link between credit risk and financial performance are receiving considerable attention in current literature. This study examines the effect of credit risk on financial performance of quoted deposit money banks (DMBs) in Nigeria. This study adopts expo-facto research design. The population of this study consists of the twenty- three (23) quoted deposit money banks with international authorisation that were operational as of December 31, 2019, census sampling techniques was used to select all the sampled frame for the study. Secondary data was extracted from annual report and accounts of these banks. Multiple regression technique was used in analyzing the combination of time series and cross - sectional data. The findings among others indicate that, the ratio of non-performing loan to return on asset, liquidity rate, Exchange rate and interest rate have significant positive effect on return on asset (financial performance) of quoted deposit money banks in Nigeria. The study recommends among others that, the management of quoted deposit money banks in Nigeria should establish sound and competent credit risk management which is expected to be in agreement with the best practices in credit risk management and adherence to the policies of the relevant authorities in Nigeria.

Keywords: Credit risk; Deposit money banks; Financial institution; Financial performance; Profitability (search for similar items in EconPapers)
Date: 2020
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Journal of Forensic Accounting & Fraud Investigation (JFAFI) is currently edited by Godwin Emmanuel Oyedokun, Muhammad Akaro Mainoma and Suleiman A. S. Aruwa

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