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Credit Risk Management and Interest Income of Banks in Nigeria

Listed author(s):
  • Fapetu Oladapo

    ()

    (Department of Banking & Finance, College of Management Sciences, Federal University of Agriculture)

  • Seyingbo Oluwagbenga Abayom

    ()

    (Department of Finance, University of Ilorin, Kwara State, Nigeria)

  • Owoeye Segun Daniel

    ()

    (Department of Banking & Finance, College of Management Sciences, Federal University of Agriculture)

Registered author(s):

    This study examines the impact of credit risk on the interest income of banks in Nigeria between the period of 2000 and 2014. Unbalanced panel data analysis was used to estimate the model with unit root test, Breusch Pagan test, trend analysis, descriptive statistics, Perasan CD Test, heteroskedasticity test, heterogeneity test, serial correlation test, Jarquebera, F-statistics, random effect, fixed effect, time effect, Prob value, Hausman test and rho as the estimation parameters. The study discovered that NPL, LLP and LA are statistically significant in explaining the variation in interest income across banks in Nigeria, while LA/TD is not statistically significant in explaining the variation in interest income across banks in Nigeria. Based on this, the study recommends that regular update of credit policy and adequate measures to monitor loans should be put in place by banks in Nigeria, as these measures will reduce bad loans and ultimately cause a reduction in loan loss provisions., 23-35

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    File URL: http://cmss.univnt.ro/wp-content/uploads/vol/split/vol_V_issue_1/CMSS_vol_V_issue_1_art.003.pdf
    File Function: First version, 2017
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    Article provided by "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences in its journal Computational Methods in Social Sciences (CMSS).

    Volume (Year): 5 (2017)
    Issue (Month): 1 (June)
    Pages: 23-35

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    Handle: RePEc:ntu:ntcmss:vol5-iss1-17-23
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    1. Allen N. Berger & Christa H. S. Bouwman, 2009. "Bank Liquidity Creation," Review of Financial Studies, Society for Financial Studies, vol. 22(9), pages 3779-3837, September.
    2. IDOWU Abiola & Awoyemi Samuel Olausi, 2014. "The Impact of Credit Risk Management on the Commercial Banks Performance in Nigeria," International Journal of Management and Sustainability, Conscientia Beam, vol. 3(5), pages 295-306.
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