ABSTRACT

The study investigated credit risk management and deposit money bank performance in Nigeria utilizing panel data from ten (10) conveniently sampled deposit money banks for a period of 5 years (2014 to 2018). The rationale for the present study is predicated on the fact that risk is a critical consideration for every decision of deposit money banks and also a major determinant of their performance.

The study employed the Ordinary Least Squares techniques on variables such as loans and advances (LAA), non-performing loans (NPL), capital adequacy ratio (CAR) and return on assets (ROA). The study showed evidence that loans and advances (LAA) and capital adequacy ratio (CAR) had a positive and statistically significant relationship with the performance of deposit money banks in Nigeria, while non-performing loans (NPL) had a negative and statistically insignificant relationship with the performance of deposit money banks in Nigeria.

The study recommends among others that, management needs to be cautious in setting up a credit policy that will not negatively affect the operations of their banks in order to ensure judicious utilization of deposits and maximization of profit. Also, the study recommends that Nigerian Government need to ensure adequate energy facilities should be embraced in the different sectors of the Nigerian economy as well as promoting energy-efficient products and appropriate practices at the side of the end users and energy generation. Furthermore, CBN for policy making purpose should regularly assess the lending attitudes of deposit money banks and effective cash management policies to avoid insolvency in the financial system. Also, to increase credit volume, the interest rate policy must be considered within the frame of economic circumstances of the time for low interest rate does facilitate quick repayment and drastically minimize debt failure. Finally, determining the credit worthiness of a customer whether individual or corporate organization must be carefully planned. A rush into the approval of loan without sourcing adequate and relevant information on the prospective borrowers must be avoided if the bank wishes to circumvent delays in the recovery of debt.