Economics, Econometrics and Finance
8 years ago

Credit risk management boosts financial performance of Nigerian commercial banks.

Journal of Economic & Financial Studies
Credit Risk Management and Financial Performance of Selected Commercial Banks in Nigeria
Olusegun Adekunle, Samson Yimka Alalade, Taofeek Agbatogun

Paper Summary

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Credit risk management plays a crucial role in the financial success of commercial banks in Nigeria. By analyzing data from 10 banks over a five-year period, it was found that effectively managing credit risks can significantly improve a bank's financial performance. Specifically, maintaining a low level of non-performing loans while setting aside enough funds for potential loan losses can lead to higher returns on equity and assets. This suggests that careful management of credit risks can help banks thrive in the long run.