Impact Of Credit Risk Management On The Performance Of Deposit Money Banks In Nigeria

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Impact Of Credit Risk Management On The Performance Of Deposit Money Banks In Nigeria

Abstract

Using the overparameterized and parsimonious ECM and Granger causality, this research investigates the influence of credit risk management on the performance of deposit money institutions in Nigeria. For the study, data was gathered from the CBN Statistical Bulletin, the stock exchange fact book, and the World Development Indicators (WDI) between 1989 and 2014. The results reveal that the credit risk management indicators under examination have a major impact on deposit money bank performance as judged by return on assets (ROA) and return on equity (ROE) (ROE) (ROE). There was also evidence of a granger causality relationship between the various credit risk management indicators and the various performance measures, according to the research. From LDR to ROA and NLTL to ROE, respectively, there is a unidirectional granger causality relationship. According to the study’s results, deposit money banks should exercise prudence while setting credit regulations so as not to risk their operations, and ensure reasonable use of deposits and profit maximization in the short and long term.

 

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