Credit Risk Management and Financial Performance of Selected Commercial Banks in Nigeria


  • Olusegun Adekunle Department of Business Administration Gateway Polytechnic, Saapade, Ogun State, Nigeria
  • Samson Yimka Alalade Department of Economics, Banking and Finance Babcock Business School, Babcock University Ilishan Remo, Ogun State, Nigeria
  • Taofeek Agbatogun Department of Accountancy Abraham Adesanya Polytechnic Atikori, Ijebu Igbo, Ogun State, Nigeria
  • Cole Abimbola



Credit risk management, Financial performance, Non-performing loan, Return on equity.


The study examines the role of credit risk management in value creation process among commercial banks in Nigeria. The study reviews the concepts, theories, legal acts and standards relating to the credit risk management and then develops a conceptual model with four antecedents to credit risk. The study analyzes the impact of these antecedents such as antecedents are loan and advance loss provision, total loan and advances, non-performing loan and total asset on accounting Return on Equity (ROE) and Return on Asset (ROA). The panel data come from 10 commercial banks listed on Nigeria Stock Exchange (NSE) between 2006 and 2010. The results reveal that credit risk management has significant effect on financial performance of commercial banks and further recommend that maintaining minimum level of non-performing loans vis-à-vis provision for loans and advances will enhance financial performance through its positive effect on return on equity.


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