Dynamics of Credit Management and Performance of Deposit Money Banks in Nigeria

Abstract

This study investigated the relationship between credit management and performance of deposit money banks in Nigeria. In specific terms the study x-rayed the various credit policies used by the monetary authorities to curtail incessant loan delinquencies and its resultant effect on the performance of deposit money banks in Nigeria. Data for empirical analysis were sourced from the Nigerian deposit insurance corporation spanning from 1990 to 2023. Error Correction Mechanism model was employed to estimate the various models specified. It was found among others that changes in non-performing loans (credit risks) negatively but significantly impacted on changes in bank performance in the long run. Changes in average liquidity ratio in the long run process negatively but insignificantly affected changes in bank performance. The researchers recommend among others that the monetary authorities should intensify their regulatory as well as their supervisory role as it concerns the reduction of the volume of bad loans granted by banking system in Nigeria. Therefore, there is need for the Nigerian government to prioritize credit management, particularly in the deposit money banks to foster sustainable performance.