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Research Article |

Credit Risk Management as a Determinant of Non-Performance Loan of Deposit Money Banks in Nigeria

This study examined this effect of credit risk management of non-performing loans of Deposit Money Banks in Nigeria. Credit risk management was measured with Capital adequacy, Loan and advance, Loan loss provision and Loan to total asset ratio while non-performing loan was measured with non-performing loan to total loan ratio. The study covered a period of 10 years spanning from 2013 to 2022 and all the 14 listed banks in Nigeria. As provided, the study used both cross sectional and time series data. Thus, the study adopted panel regression estimation techniques which comprises of OLS estimation, the Fixed effect model and Random Effect Model. It was discovered that CAA (Capital Adequacy Ratio) had a positive and significant effect on NPL/TLR (Non-Performing Loan to Total Loan Ratio). LLP (Loan Loss Provision) and LTAR (Loan to Total Asset Ratio) had a positive but insignificant effect on NPL/TLR. LA (Loan and Advances) had a negative and insignificant effect on NPL/TLR. From the analysis conducted it was concluded that that credit management components have the capacity to influence non-performing loan of commercial banks in Nigeria though at different significant levels. In-line with this, discovery, it was recommended that the management should consider different loan loss provisioning approaches for specific loan categories to minimize the adverse effect of loan loss provision.

Credit Risk Management, Capital Adequacy, Loan and Advance, Non-Performing Loan, Non-Performing Loan

APA Style

Tomomewo, A. O., Falayi, I., Uhuaba, O. (2023). Credit Risk Management as a Determinant of Non-Performance Loan of Deposit Money Banks in Nigeria. Journal of Finance and Accounting, 11(6), 179-188. https://doi.org/10.11648/j.jfa.20231106.11

ACS Style

Tomomewo, A. O.; Falayi, I.; Uhuaba, O. Credit Risk Management as a Determinant of Non-Performance Loan of Deposit Money Banks in Nigeria. J. Finance Account. 2023, 11(6), 179-188. doi: 10.11648/j.jfa.20231106.11

AMA Style

Tomomewo AO, Falayi I, Uhuaba O. Credit Risk Management as a Determinant of Non-Performance Loan of Deposit Money Banks in Nigeria. J Finance Account. 2023;11(6):179-188. doi: 10.11648/j.jfa.20231106.11

Copyright © 2023 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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