The Impact of Credit Risk on Bank’s Performance in Nigeria

Student: IMUETINYANOSA Favour OSAGIE (Project, 2025)
Department of Economics
Ambrose Alli University, Ekpoma, Edo State

Abstract

This study empirically examined the impact of credit risk management on deposit money bank performance in Nigeria from 1989 to 2021. In order to achieve the objective of the study, a linear multiple econometric model was specified, which consisted of Non-Performing Loan, Loan and Advance by deposit money bank, Loan Loss Provision and total deposit are the independent variables while return on asset is the dependent variables. Data were collected from secondary sources and analyzed with Ordinary Least Squares (OLS) in order to achieve the stated objectives. The study revealed that non-performing loan, loan and advance by deposit money bank, and total deposit has a significant impact on bank performance in Nigeria. Therefore, the study recommended that banks in Nigeria banks should adopt an aggressive deposit mobilization to increase credit availability and develop a reliable credit risk management strategy, banks should engage in proper credit risk assessment before giving out loans and promote a reliable loan recovery process with adequate punishment for loan payment defaulters and finally, there should be a policy for short-term periodic review of prudential guidelines and other regulations governing banking operations with respect to providing loan facilities, which will address evolving issues relating to credit risks.

Keywords
impact credit performance Nigeria
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