ABSTRACT

The study empirically examined the relationship between credit risk management and performance of deposit money banks (DMBs) in Nigeria for a period of 9 years (2013 to 2021). Relevant credit risk management factors such as capital adequacy ratio (CADR), non-performing loan ratio (NPLR), loan loss provisions (LLPR), loan to deposit ratio (LTDR) and bank size (SIZE)) were regressed on banks’ performance (measured as ROA), using the fully modified ordinary least square econometric method of analysis. The results from the analysis of data revealed that capital adequacy ratio and bank size have significant negative impact on the overall performance of deposit money banks in Nigeria.  However, non-performing loans, loans loss provision and loan-to-deposit-ratio failed the 5 percent significance level, as they were not relevant in the determination of deposit money banks’ performance. Thus, we conclude that CBN and banks’ management should be deliberate and more decisive in taking actions on erring credit officers who often compromise the credit system for their selfish gains at the detriment of the banks. Also, loans’ recovery drive should be their watch wall and this must be carried out by current state of the art strategy as it is done in the more technological advanced economies of the world.