File Name: credit risk management and bank performance in nigeria .zip
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More about this item Keywords credit risk ; bank performance ; risk management ; return on equity ; return on asset ; non-performing loans. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ See general information about how to correct material in RePEc. For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk. If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item.
Show all documents An effective credit risk management ECRM practice does not eliminate risks, but minimize risks. The implementation and maintenance of ECRM warrants firm commitment to improve the efficiency of business processes. The efficiency can attracts some benefits like i saving resources: Time, assets, income, property and personnel; ii Protection of an organization reputation and public image; iii prevention or reduction of legal liabilities; iv increasing the stability of operations and promoting continuous improvement; v protecting people and environment from harm; vi avoiding fines for corporate non-compliance with regulations and legislation; vii enhancing the ability to prepare for unforeseen and unexpected circumstances; viii enhancing competitive advantage through improved decision support and market intelligence based on more accurate risk -adjusted management information; ix improved shareholder value and confidence, which is especially valuable in times of crisis when shareholder trust is stressed to its maximum limits; and x assisting in clearly defining suitable risk management techniques, including insurance needs Meulbroek, ; Hillson, ; Protiviti Inc. In the case of banks , according to Abdullahi , the issue of credit risk is even of greater concern because of the higher level of perceived risks resulting from some of the characteristics of clients and business conditions that they find themselves in, which needs thorough empirical examinations.
This research work aims to examine the effects of credit risk management on banking performance in Nigeria. Financial institutions are being exposed to a variety of risks, among them are interest rate risk, foreign exchange risk, political risk, liquidity risk, market risk, and credit risk. Credit risk is the possibility that the actual return on an investment or loan extended will deviate from that which was expected Conford, Coyle defines credit risk as losses from the refusal or inability of credit customers to pay what is owed in full and on time. Credit risk includes:. Some of the main sources of credit risk are; limited institutional capacity, inappropriate credit policies, volatile interest rate, poor management, inappropriate law, low capital, and liquidity levels, directed lending, massive licensing of banks, poor loan underwriting, reckless lending, poor credit assessment, no non-executive directors, laxity in credit assessment, poor lending practices, government interference and inadequate supervision by central banks Chen et al, ; Ayayi,
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Skip to search form Skip to main content You are currently offline. Some features of the site may not work correctly. The aim of this study is to investigate the impact of credit risk management on the performance of commercial banks in Nigeria. Financial reports of seven commercial banking firms were used to analyze for seven years — Save to Library.
Skip to search form Skip to main content You are currently offline. Some features of the site may not work correctly. A panel estimation of six banks from to was done using the random effect model framework. Our findings show that credit risk is negatively and significantly related to bank performance, measured by return on assets ROA. This suggests that an increased exposure to credit risk reduces bank profitability. We also found that total loan has a positive and significant impact on bank performance.
This study intends to examine the impact of credit risk on bank performance in Nigeria for the period The pervasive incidence of non-performing loan is one of the prime causes of failure in the banking system. The internal exams to ascertain if loans are with collateralized and self-liquidating could not be held accountable. The findings revealed that only bank size has a positive and significant impact on bank performance. The study concludes that, there is a positive relationship between credit risk and bank performance in Nigeria, The study recommends that banks should adhere to credit risk principle before giving out credit as this may affect their performance. Adequately managing credit risk in financial institutions is critical for the survival and growth of the financial institutions. He argued that since this money received from the customers was always available to the bank, they later put it to use by investing in assets that are profit earning.
Before overarching these risk categ ories, given below are some basics about risk Management and some guiding principles to manage risks in banking organization. For example, the terms and conditions, invoicing promptly and the controlling debts.
The broad objective of the study was to ascertain the effect of risk asset management on the optimal financial performance of commercial banks in Nigeria. The study is a longitudinal survey, so the ex-post facto research design was applied. Research data were analysed using generalized method of moments GMM and vector Error Correction Model, after testing and adjusting the data for stationarity and Cointegration.
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