Open AccessThe Impact of Credit Risk Management on the Commercial Banks Performance in Nigeria
Author(s) -
Abiola Idowu,
Awoyemi Samuel Olausi
Publication year - 2014
Publication title -
international journal of management and sustainability
Language(s) - English
Resource type - Journals
eISSN - 2306-9856
pISSN - 2306-0662
DOI - 10.18488/journal.11/2014.3.5/11.5.295.306
Subject(s) - return on equity , credit risk , profitability index , return on assets , business , capital adequacy ratio , risk management , panel data , finance , commercial bank , financial system , actuarial science , economics , profit (economics) , econometrics , microeconomics
Credit risk management in banks has become more important not only because of the financial crisis that the industry is experiencing currently, but also a crucial concept which determine banks’ survival, growth and profitability. 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 (2005 – 2011). The panel regression model was employed for the estimation of the model. In the model, Return on Equity (ROE) and Return on Asset (ROA) were used as the performance indicators while Non-Performing Loans (NPL) and Capital Adequacy Ratio (CAR) as credit risk management indicators. The findings revealed that credit risk management has a significant impact on the profitability of commercial banks’ in Nigeria.