EFFECT OF CREDIT RISK MANAGEMENT ON FINANCIAL PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study examines the effect of credit risk management on financial performance of deposit money banks in Nigeria. The study used ex-post factor research design. The study was quantitative in nature and secondary data was adopted. The population and sample size of this study includes all the 13 Deposit Money Banks in Nigeria listed on the Nigerian Exchange Group (NGX). The study used panel data which was obtained from secondary sources. The study employed STATA version 14 software and the normality test for the residuals was carried out using Shapiro – Wilk test. Data were analysed and tested using ordinary least square regression model. The findings reveal that capital adequacy ratio and net interest margin have significant influenced on the financial performance (ROA) of listed DMBs in Nigeria. Also, non-performing loan to total deposit ratio has no significant impact on the financial performance (ROA) of listed DMBs in Nigeria. The study recommended that bank managers need to put more efforts to control the non-performing loan by critically evaluating borrowers’ ability to pay back. The regulators should also strengthen its monitoring capacity in this regard.