This study examines the impact credit risk management has on the profitability of commercial banks in Nigeria
Charles Onyeiwu (),
Gideon Ajayi () and
Obumneke Muoneke B ()
Additional contact information
Charles Onyeiwu: University of Lagos, Akoka-Yaba, Nigeria
Gideon Ajayi: University of Lagos, Akoka-Yaba, Nigeria
Obumneke Muoneke B: University of Lagos, Akoka-Yaba, Nigeria
Journal of Banking and Financial Economics, 2020, vol. 1, issue 13, 5-22
Abstract:
The main objective of this material is to show how credit risk parameters are related to the expected performance of commercial banks in Nigeria. Using the regression analysis, relationship was drawn between credit risk parameters (which include capital adequacy ratio and non-performing loan ratio) and the profitability ratio (return on average asset, in particular) of five big Nigerian banks. Mixed research methodology was adopted in that primary data were sourced via questionnaires and secondary data were used via annual report of selected banks. Regression analysis was used to analyse the data. The conclusion drawn from the data analysis shows that there is a strong relationship between credit risk parameters and returns of the bank implying that credit risk management has a strong impact on the profitability of commercial banks in Nigeria. The study recommends that banks’ capital should be matched with their total risk exposure and if there is an imbalance, new capital requirements are necessary. Insider-related interests in loan applications should be closely monitored by the regulators to ensure continuous performance of the loan facility. Also, there should be an extant profiling of loan defaulters whether individuals or corporate entities.
Keywords: Credit risk; Management; GRETL; Commercial Banks; Nigeria (search for similar items in EconPapers)
JEL-codes: C23 G21 G28 G32 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:
Downloads: (external link)
https://jbfe.wz.uw.edu.pl/resources/html/article/details?id=208440 (text/html)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:sgm:jbfeuw:v:1:y:2020:i:13:p:5-22
Access Statistics for this article
More articles in Journal of Banking and Financial Economics from University of Warsaw, Faculty of Management Contact information at EDIRC.
Bibliographic data for series maintained by ().