Credit Risk and Financial Performance of Deposit Money Banks in Nigeria: Moderating Role of Risk Management Committee

Apochi, James George; Baffa, Asma’u Mahmood

doi:10.37745/ejaafr.2013/vol10n1098115

Cited by 4 publications

(5 citation statements)

References 8 publications

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“…Board diligence had a minimum value of 2.0 and a maximum value of 12.00 implying that there was a bank whose board members met only two times in a year which is the least for the meetings held within the study period for board members. Meanwhile, the highest number of times meetings were held by the bank board was twelve (12) times within the period covered by the study. The mean value of about 6.195 implied that, on the average, bank boards met for at least six times within the period.…”

Section: Resultsmentioning

confidence: 99%

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Board Attributes and Credit Risk Exposure of Listed Deposit Money Banks in Nigeria: The Moderating Effect of Risk Committee Size

Muhammad,

Tukur,

Dabari

et al. 2023

JEMT

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Aim: This study examined the moderating effect of Risk Committee Size on the relationship between board attributes and Credit Risk Exposure of listed Deposit Money Banks in Nigeria. Study Design: This study adopted ex-post facto research design. Place and Duration of Study: Department of Accounting and period 2009-2019. Methodology: Panel regression technique was used, Stata 13 was adopted as tool for the data analysis. Secondary source of data was employed and were obtained from the annual reports and accounts of the banks over the period. Results: The findings reveal that, board size has significant effect on credit risk exposure of banks before and after moderation. However, moderating board attributes revealed that board size and board diligence drive down the credit risk exposure of banks. Among the important policy implications is that the variables used suggest that there is continuous need by CBN to encourage and enforce the full application of corporate governance codes by banks in order to reap the full benefit of compliance. Conclusion: Based on the findings, this study concludes that board size is associated with less credit risk exposure, while high number of board size do not guarantee reduction in credit risk exposure of banks. Recommendation: It is therefore recommended amongst others that the number of board size should be increased alongside increase in the number of risk committee members to help reduce the risk exposure of banks in Nigeria.

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Section: Resultsmentioning

confidence: 99%

“…Most importantly, the 2018 CBN forensic audit report that led to the collapse of Skye Banks Plc has continued to raise concern to stakeholders in Nigeria [9][10][11][12][13][14]. The liquidity challenge that initiated the merger of Access bank Plc and Diamond Bank Plc in 2019 emanated due to poor credit risk management.…”

Section: Introductionmentioning

confidence: 99%

Board Attributes and Credit Risk Exposure of Listed Deposit Money Banks in Nigeria: The Moderating Effect of Risk Committee Size

Muhammad,

Tukur,

Dabari

et al. 2023

JEMT

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“…A credit rating comprises an assessment of a borrower's creditworthiness to avoid default risk, which could lead to financial losses. The primary purpose of credit rating is to verify the borrower's default risk capacity (Apochi & Baffa, 2022;Bhattarai, 2019). The borrower's information is essential in lending decisions by credit assessment and loan managers.…”

Section: Credit Risk Managementmentioning

confidence: 99%

Does credit risk management impact the financial performance of commercial banks?

Fadun

Silwimba²

2023

IJBES

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Commercial banks accept deposits and lend money for investment and consumption. This study used five (5) first-tier banks in Nigeria as a case study to analyze the effects of credit risk management on the financial performance of commercial banks. The study examined fifteen (15) years' worth of panel data (from 2005 to 2019), taken from the audited financial reports of five first-tier listed banks. Deposit Money Banks (DMBs) are the only banks used, and they are all listed on the Nigerian Stock Exchange. Non-performing loans (NPL) and expected credit loss impairment provisions (ECL) were utilized in this study as indicators of credit risk management. At the same time, return on assets (ROA) was employed to measure financial performance.

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“…A credit rating comprises an assessment of a borrower's creditworthiness to avoid default risk, which could lead to financial losses. The primary purpose of credit rating is to verify the borrower's default risk capacity (Apochi & Baffa, 2022). The borrower's information is essential in lending decisions by credit assessment and loan managers.…”

Section: Introductionmentioning

confidence: 99%

Credit Risk Management and Financial Performance of Listed Commercial Banks in Kenya

Ikinya Okiru,

Bichanga Miroga

2024

Int J Res Rev

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Commercial banks are concerned with the provision of credit facilities in form of loans and advances to customers. These loans and advances are expected to be repaid by customers in line with the agreement reached with their bankers. Customers’ default in the repayment of loans and advances at the agreed period may lead to bad and doubtful debts and this can affect the financial health, profitability and going concern status of the bank. This study empirically explored the effect of credit risk management on the financial performance of nine listed commercial banks in Kenya for the period, 2018-2022. Credit risk management as the independent variable, was surrogated by two parameters- loans to deposit ratio and Non-performing Loans ratio. Return on Assets was used as a proxy for financial performance of the listed commercial banks in Kenya. The study utilized the information asymmetry theory and the theory of moral hazard and adverse selection. A correlational research design, using secondary data derived from listed commercial banks’ annual audited reports and information from Nairobi Securities Exchange was used in this study. The target population of the study was the nine listed commercial banks in Kenya. A pilot study was carried by performing the normality and multi-collinearity tests from the sample data collected for purposes of assessing the reliability and validity of the model. A census method was adopted in data collection since the target population was manageable. Collected data was analyzed using the Statistical Package for Social Sciences Version 28 where both descriptive and inferential statistical methods were used to describe and depict the results (Mean, Standard Deviation, Correlation, Regression and Analysis of variances). The findings of the study revealed a statistically significant regression effect and indicative of accomplished prediction of financial performance of the listed commercial banks through the F-calculated value which showed that the model was significant. Loan to deposit ratio explained .4% (r =.280) of financial performance of listed commercial banks in Kenya and non-performing loans ratio -36.5% (r=-.681) of financial performance of the listed commercial banks in Kenya. The study will be expected to add to the existing literature in the finance field and more importantly, the credit risk management in commercial banks and other related sectors. The study recommended that; management balance the ratio of financing between equity, debt and customer deposits to extend lending capacity, and generate high earnings volume; desist from holding capital without investing for improved financial achievement; management should maintain a moderate level of Loans and advances to deposit ratio since it is a measure of the banks’ ability to survive withdrawals, because higher rates lead to liquidity problems; give credit-risk management prominence in their strategic policies and finally, due to the continuous deterioration and accumulation of the nonperforming loans, management ought to strengthen loan recovery measures. Keywords: Credit Risk Management, Financial Performance, Listed Banks, Equity Multiplier Ratio, Capital Adequacy Ratio, Nonperforming Loans

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Credit Risk and Financial Performance of Deposit Money Banks in Nigeria: Moderating Role of Risk Management Committee

Cited by 4 publications

References 8 publications

Board Attributes and Credit Risk Exposure of Listed Deposit Money Banks in Nigeria: The Moderating Effect of Risk Committee Size

Board Attributes and Credit Risk Exposure of Listed Deposit Money Banks in Nigeria: The Moderating Effect of Risk Committee Size

Does credit risk management impact the financial performance of commercial banks?

Credit Risk Management and Financial Performance of Listed Commercial Banks in Kenya

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