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Credit Risk Management and Financial Performance of Selected Commercial Banks in Nigeria

Author

Listed:
  • Alalade S. Yimka

    (Department of Economics, Banking and Finance, Babcock Business School, Babcock University, Nigeria)

  • Agbatogun Taofeek

    (Department of Accountancy, Abraham Adesanya Polytechnic, Nigeria.)

  • Cole Abimbola

    (Department of Economics, Banking and Finance, Babcock Business School, Babcock University, Nigeria.)

  • Adekunle Olusegun

    (Department of Business Administration, Gateway Polytechnic, Nigeria.)

Abstract

The study examines the role of credit risk management in value creation process among commercial banks in Nigeria. The study reviews the concepts, theories, legal acts and standards relating to the credit risk management and then develops a conceptual model with four antecedents to credit risk. The study analyzes the impact of these antecedents such as antecedents are loan and advance loss provision, total loan and advances, non-performing loan and total asset on accounting Return on Equity (ROE) and Return on Asset (ROA). The panel data come from 10 commercial banks listed on Nigeria Stock Exchange (NSE) between 2006 and 2010. The results reveal that credit risk management has significant effect on financial performance of commercial banks and further recommend that maintaining minimum level of non-performing loans vis-Ã -vis provision for loans and advances will enhance financial performance through its positive effect on return on equity.

Suggested Citation

  • Alalade S. Yimka & Agbatogun Taofeek & Cole Abimbola & Adekunle Olusegun, 2015. "Credit Risk Management and Financial Performance of Selected Commercial Banks in Nigeria," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 3(1), pages 1-11, February.
    • Handle: RePEc:lrc:lareco:v:3:y:2015:i:1:p:1-11
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    Citations

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    Cited by:

    1. John Ugah, 2020. "Financial Risks Management and Bank Profitability in Nigeria: Case of Access Bank of Nigeria Plc," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(9), pages 184-190, September.
    2. Sathyamoorthi C. R. & Mogotsinyana Mapharing & Mphoeng Mphoeng & Mashoko Dzimiri, 2020. "Impact of Financial Risk Management Practices on Financial Performance: Evidence from Commercial Banks in Botswana," Applied Finance and Accounting, Redfame publishing, vol. 6(1), pages 25-39, February.

    More about this item

    Keywords

    Credit risk management; Financial performance: Non-performing loan; Return on equity.;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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