CREDIT MANAGEMENT AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

The study determined the effect of credit management on the financial performance of
deposit money banks in Nigeria. The specific objectives of the study are to determine the
effect of non-performing loan ratio and capital adequacy ratio on the return on assets of
listed commercial banks. Ex post facto research was adopted for the study. A sample of ten
banks was used in this study from thirteen banks in Nigeria. Data were extracted from
annual accounts of the sampled banks in Nigeria from 2012 to 2022. OLS regression
analysis is suitable because it is adjudged to be an objective measure in examining the effect
of independent variables. The study found that non-performing loan ratio has a significant
negative effect on the return on assets of banks in Nigeria while capital adequacy ratio was
insignificant on the return on assets on the banks in Nigeria. Based on the findings, the study
recommends among others that banks should implement more stringent credit risk
assessment measures to reduce the likelihood of default by borrowers, which will in turn
reduce their non-performing loan ratio. Non-performing loan ratio, Capital adequacy ratio and Financial
performance