THE IMPACT OF CREDIT RISK MANAGEMENT ON THE PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

ABSTRACT This study examined the impact of credit risk management on the deposit money banks performance, using evidence from the annual reports/financial statements of some selected deposit money banks in Nigeria during a 18year period from 2005- 2022. The study was carried out using ex-post factor and regression analysis. Descriptive statistics were used in the presentation of data, while Anova was applied in assessing the effect of credit risk management variables as total loan to deposit (TLD); non-performing to total loans ratio (NPL); total loans to total assets (TLA); on the financial performance surrogated by return on assets (ROA). Regression results from the collinearity Diagnostics reveals that NPL and TLA have positive and significant impact on the financial performance; while TLD have no significant impact of the financial performance measured by the ROA. The study concludes that the total regulatory capital held by banks vis-à-vis the risk weighted assets as measured by TLA is sufficient. Following this conclusion, it is therefore, recommended that banks that are yet to adhere to the minimum 10% TLA for national banks and 15% for international banks as suggested by the Central Bank of Nigeria (CBN) should do so or even surpass the minimum benchmark in order to increase shareholder's wealth represented by ROA. : Keywords: Credit risk management, financial performance, deposit money banks, fixed effects model, return on equity