CREDIT RISK MANAGEMENT AND PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIA
Banks in all climes are primarily faced with problem of credit risk whenever they mediate between the surplus and the deficit units of the economy. This study examined the impact of credit risk management on the profitability of deposit money banks in Nigeria. Specifically, this study evaluated the...
Saved in:
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Kwara State University, Malete Nigeria
2023-11-01
|
| Series: | Malete Journal of Accounting and Finance |
| Subjects: | |
| Online Access: | https://majaf.com.ng/index.php/majaf/article/view/35 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1823859631604105216 |
|---|---|
| author | Alade Ayodeji ADEMOKOYA Mubarak Olajide SALAMI Halimat Bukola ISAU Habeeb Abiola IBRAHIM |
| author_facet | Alade Ayodeji ADEMOKOYA Mubarak Olajide SALAMI Halimat Bukola ISAU Habeeb Abiola IBRAHIM |
| author_sort | Alade Ayodeji ADEMOKOYA |
| collection | DOAJ |
| description |
Banks in all climes are primarily faced with problem of credit risk whenever they mediate between the surplus and the deficit units of the economy. This study examined the impact of credit risk management on the profitability of deposit money banks in Nigeria. Specifically, this study evaluated the impact of credit risk management on return on assets, return on equity, and net operating income of deposit money banks in Nigeria. This study adopted an ex post facto research design. Nineteen listed deposit money banks as at December 31, 2018 form the population of this study out of which a sample of fifteen banks were selected based on complete availability of data from 2007-2018. Data obtained was subjected to fixed and random effects regression estimations for the various models in this study using the Hausman test. Findings revealed that: (i) loan-value ratio and loan-deposit ratio significantly impacted on return on assets of deposit money banks, while non-performing loan ratio, bank size, and log of total loans did not significantly impact on return on assets of deposit money banks in Nigeria; (ii) total loans significantly affected return on equity of deposit money banks, while loan-value ratio, loan-deposit ratio, bank size, and non-performing loans did not significantly affect return on equity of deposit money banks in Nigeria; and (iii) bank size, non-performing loan, and total loans were found to significantly affect net operating income of deposit money banks in Nigeria, while loan-value ratio, and loan-deposit ratio did not significantly exert on net operating income of deposit money banks in Nigeria. The study therefore, concluded that loan-value ratio, loan-deposit ratio, value of total loans, bank size, and non-performing loans influence banks profitability in Nigeria, and recommended that proper attention be paid to these variables in order to increase the profitability of deposit money banks in Nigeria.
|
| format | Article |
| id | doaj-art-a93eb774d4f64c158c78c48b763b3dbe |
| institution | Kabale University |
| issn | 2735-9603 |
| language | English |
| publishDate | 2023-11-01 |
| publisher | Kwara State University, Malete Nigeria |
| record_format | Article |
| series | Malete Journal of Accounting and Finance |
| spelling | doaj-art-a93eb774d4f64c158c78c48b763b3dbe2025-02-10T23:06:30ZengKwara State University, Malete NigeriaMalete Journal of Accounting and Finance2735-96032023-11-0121CREDIT RISK MANAGEMENT AND PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIAAlade Ayodeji ADEMOKOYA0Mubarak Olajide SALAMI1Halimat Bukola ISAU2Habeeb Abiola IBRAHIM3Kwara State University, MaleteKwara State University, MaleteKwara State University, MaleteKwara State University, Malete Banks in all climes are primarily faced with problem of credit risk whenever they mediate between the surplus and the deficit units of the economy. This study examined the impact of credit risk management on the profitability of deposit money banks in Nigeria. Specifically, this study evaluated the impact of credit risk management on return on assets, return on equity, and net operating income of deposit money banks in Nigeria. This study adopted an ex post facto research design. Nineteen listed deposit money banks as at December 31, 2018 form the population of this study out of which a sample of fifteen banks were selected based on complete availability of data from 2007-2018. Data obtained was subjected to fixed and random effects regression estimations for the various models in this study using the Hausman test. Findings revealed that: (i) loan-value ratio and loan-deposit ratio significantly impacted on return on assets of deposit money banks, while non-performing loan ratio, bank size, and log of total loans did not significantly impact on return on assets of deposit money banks in Nigeria; (ii) total loans significantly affected return on equity of deposit money banks, while loan-value ratio, loan-deposit ratio, bank size, and non-performing loans did not significantly affect return on equity of deposit money banks in Nigeria; and (iii) bank size, non-performing loan, and total loans were found to significantly affect net operating income of deposit money banks in Nigeria, while loan-value ratio, and loan-deposit ratio did not significantly exert on net operating income of deposit money banks in Nigeria. The study therefore, concluded that loan-value ratio, loan-deposit ratio, value of total loans, bank size, and non-performing loans influence banks profitability in Nigeria, and recommended that proper attention be paid to these variables in order to increase the profitability of deposit money banks in Nigeria. https://majaf.com.ng/index.php/majaf/article/view/35return on assetreturn on equitynet operating incomecredit risk management |
| spellingShingle | Alade Ayodeji ADEMOKOYA Mubarak Olajide SALAMI Halimat Bukola ISAU Habeeb Abiola IBRAHIM CREDIT RISK MANAGEMENT AND PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIA Malete Journal of Accounting and Finance return on asset return on equity net operating income credit risk management |
| title | CREDIT RISK MANAGEMENT AND PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIA |
| title_full | CREDIT RISK MANAGEMENT AND PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIA |
| title_fullStr | CREDIT RISK MANAGEMENT AND PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIA |
| title_full_unstemmed | CREDIT RISK MANAGEMENT AND PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIA |
| title_short | CREDIT RISK MANAGEMENT AND PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIA |
| title_sort | credit risk management and profitability of deposit money banks in nigeria |
| topic | return on asset return on equity net operating income credit risk management |
| url | https://majaf.com.ng/index.php/majaf/article/view/35 |
| work_keys_str_mv | AT aladeayodejiademokoya creditriskmanagementandprofitabilityofdepositmoneybanksinnigeria AT mubarakolajidesalami creditriskmanagementandprofitabilityofdepositmoneybanksinnigeria AT halimatbukolaisau creditriskmanagementandprofitabilityofdepositmoneybanksinnigeria AT habeebabiolaibrahim creditriskmanagementandprofitabilityofdepositmoneybanksinnigeria |