The Impact of Credit Risk Management and Macroeconomic Variableson Bank Performance in Nigeria
Abstract
The aim of this paper is to identify the main impact that credit management and macroeconomic
variables have on bank performance in Nigeria. The reason for this is the numerous high level of deposit money
banks’ bad debt based on available data. The bad debt tended to have a negative effect on performance. To this
end, the researchers conducted a study using macroeconomic data, and other indicators of credit management
and bank performance from 2009-2017 using 12 deposit money banks in Nigeria. The ordinary least square
(OLS) method was utilized to determine the factors that explains the subject matter. The result showed the
presence of a positive connection between the capital adequacy proportion and the sum national income on the
Return on Asset. Therefore, Depositing Money Banks with a greater proportion of capital sufficiency can all the
more likely develop more advances and retain credit misfortunes whenever it occurs and thus document better
financial productivity as for the assets
References
[1] Abdelrahim, K. E. Effectiveness of credit
risk management of Saudi Banks in the
light of global financial crisis: A qualitative
study. Asian Transactions on Basic and
Applied Sciences, Vol. 3, No. 1, (2013), pp.
12 – 22.
[2] Abid, S. F., & Lodhi, S. Impact of changes
in reserve requirement on banks
profitability: A case of commercial banks
in Pakistan. European Journal of Business
and Management, Vol. 7, No. 31, (2015),
pp. 1-6.
[3] Adeola, O., & Ikpesu, F. Macroeconomic
determinants of non-performing loans In
Nigeria : An empirical analysis. Journal of
Developing Areas, Vol. 51, No. 2, (2017),
31–43.
[4] Adeusi, S. O., Akeke, N. I., Adebisi, O. S.,
& Oladunjoye, O. Risk management and
financial performance of banks in Nigeria.
Finance Journal, Vol. 12, No. 4, (2014), pp.
1 – 12
[5] Aduda, J. & Gitonga, J. The relationship
between credit risk management and
profitability among the commercial banks
in Kenya. Journal of Modern Accounting
and Auditing, Vol. 7, No. 9, (2011), 9-34
[6] Afriyie, H. O. & Akotey, J. O. Credit risk
management and profitability of selected
rural banks in Ghana. Catholic University
College of Ghana Journal. Vol. 2, No. 1,
(2012), pp. 13-24
[7] Alshatti, A. S. The effect of credit risk
management on financial performance of
the Jordanian commercial banks.
Investment Management and Financial
Innovations, Vol. 12, No. 1, (2015), 338-
345.
[8] Akinselure, O. P. & Akinola, A. T. Impact
of credit risk management on profitability
of selected deposit money banks in
Nigeria. International Journal ofEconomics, Commerce and Management,
Vol. 8, No. 9, (2019), pp. 37 – 48
[9] Alobari, C., Naenwi, M., Zukbee, S. O., &
Grend, M. D. Impact of credit management
on bank performance in Nigeria.
Equatorial Journal of Finance and
Management Sciences, Vol. 3, No. 1,
(2018), pp. 17 - 23.
[10]Athanasoglou, P. P., Brissimis, S. N., &
Delis, M. D.. Bank-specific, industryspecific and macroeconomic determinants
of bank profitability. Journal of
international financial Markets,
Institutions and Money, Vol. 18, No. 2,
(2008), pp. 121 – 136
[11]Bhattarai, Y. R. Effect of credit risk on the
performance of Nepalese commercial
banks. Journal of Management and
Finance, Vol. 1, No. 1, (2014), pp. 41-64.
[12]Chidozie, E. & Ayadi, S. Macroeconomy
and banks’ profitability in Nigeria.
International Multi-disciplinary Journal,
Ethiopia, Vol. 11, No. (2), (2017), pp. 121-
137.
[13]Davis , O. & Ngozi, O. Credit risk and
economic growth in Nigeria. European
Journal of Business, Economics and
Accountancy. Vol. 12, No. 4, (2019), pp.
35 – 47
[14]Ghyasi, A. Effect of macroeconomic
factors on credit risk of banks in developed
and developing countries: Dynamic panel
method. International Journal of
Economics and Financial Issues, Vol. 6,
No. 4, (2016), 1937-1944.
[15]Isibor, A.A., Felicia, O., Maria, A.,
Godswill, O., and Chisom, N.. Exchange
rate management and sectoral output
performance. International Journal of
Supply Chain Management, Vol. 7, No. 5,
(2018), pp. 129-134
[16]Isibor, A., Ojo, J. A. T., and Ikpefan, O. A.
Does financial deregulation spur economic
development in Nigeria? Peer-Reviewed
Proceedings of the International Business
Information Management Association
Conference (31st IBIMA) held on 25 – 26
April 2018, Milan, Italy.
[17]Jaroslav , B., Lubos , S., Beata , G., & Jan,
D. The impact of social and economic
factors in the credit risk management of
sme. Technological and Economic
Development of Economy, Vol. 24, No. 3,
(2018), pp. 1215–1230.
[18]Kaaya, I., & Pastory, D. Credit risk and
commercial banks performance in
Tanzania: A panel data analysis. Research
Journal of Finance and Accounting, Vol.
4, No. 16, (2013), pp. 55-62.
[19]Kurawa, J. M., & Garba, S. An evaluation
of the effect of credit risk management
(CRM) on the profitability of Nigerian
banks. Journal of Modern Accounting and
Auditing, Vol. 10, No. 1, (2014), 104-123.
[20]Lehar, A. Measuring systemic risk: A risk
management approach. Journal of Banking
& Finance, Vol. 29, No. 10, (2005), pp.
2577-2603.
[21]Liu, X., & Zhang, C. Corporate
governance, social responsibility
information disclosure, and enterprise
value in China. Journal of Cleaner
Production, Vol. 14, No. 2, (2017), pp.
1075–1084.
[22]Mileris, R. The impact of macroeconomic
environment on credit risk in commercial
banks. Vol. 3, No. 1, (2015), pp. 17 – 29
[23]Ndoka, S. & Islami, M. The impact of
credit risk management in the profitability
of Albanian commercial banks during the
period 2005-2015. European Journal of
Sustainable Development, Vol. 5, No. 3,
(2016), pp. 44 - 56.
[24]Ogboi, C., & Unuafe, O. K. Impact of
credit risk management and capital
adequacy on the financial performance of
commercial banks in Nigeria. Journal of
emerging issues in economics, finance and
banking, Vol. 2, No. 3, (2013), pp. 703-
717.
[25]Olaoye , F., & Ojuolape, T. C. Credit risk
disclosure compliance and bank
performance in Nigeria: Case-study of
Zenith bank. Archives of Business
Research, Vol. 1, No. 1, (2019), pp. 1 – 14
[26]Patrick, O. N., Ikenna, J. E.and Ekemezie,
L. I. The impact of credit risk management
on deposit money banks performance in
Nigeria. Nigerian Journal of Management
Sciences, Vol. 6, No. 1, (2017), pp. 120 –
134
[27]Poudel, R. P. S. The impact of credit risk
management on financial performance of
commercial banks in Nepal. International
Journal of arts and commerce, Vol. 1, No.
5, (2012), pp. 9-15.
[28]Radivojevic, N., & Jovovic, J. Examining
of Determinants of NonPerforming Loans.
Prague Economic Papers, Vol. 26, No. 3,
(2017), pp. 300–316.
[29]Saba, I., Kouser, R., & Azeem, M.
Determinants of Non Performing Loans:
Case of US Banking Sector. The Romanian
Economic Journal, Vol. 44, No. 6, (2012),
pp. 125-136.
[30]Skarica, B. Determinants of nonperforming loans in Central and Eastern
European countries. Financial Theory and
Practice, Vol. 38, No. 1, (2014), 37–59.
[31]Udom, I. S., Agboegbulem, N. T. I., Atoi,
N. V, Adeleke, A. O., Abraham, O.,
Onumonu, O. G., & Abubakar, M.
Modelling banks ’ interest margins in
Nigeria. CBN Journal of Applied Statistics,
Vol. 7, No. 1, (2016), pp. 1–26.
[32]Uwalomwa , U., Uwuigbe, , O. R., &
Oyewo, B. Credit Management and Bank
Performance of Listed Banks in Nigeria.
Journal of Economics and Sustainable
Development, Vol. 6, No. 5, (2015), pp. 1
– 12
[33] Valeria Bondarenko, Simona FilipovaPetrakieva, Ina Taralova, Desislav Andreev,
Forecasting time series for power
consumption data in different buildings
using the fractional Brownian motion,
International Journal of Circuits, Systems
and Signal Processing, Vol. 12, (2018), pp.
646-652
[34]Xiaohua Duan, Systematic Risk
Measurement Based on CoVaR Model,
International Journal of Circuits, Systems
and Signal Processing, , Vol. 13, No. 4,
(2019), pp. 243-250
[35]Zou, Y., & Li, F. The impact of credit risk
management on profitability of
commercial banks: A study of Europe.
International Journal of Financial Studies,
Vol. 10, No. 4, (2014), pp. 14 - 26
Downloads
Published
Issue
Section
License
Copyright (c) 2026 WSEAS Transactions on Business and Economics
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Author(s) and co-author(s) jointly and severally represent and warrant that the Article is original with the author(s) and does not infringe any copyright or violate any other right of any third parties and that the Article has not been published elsewhere. Author(s) agree to the terms that the WSEAS Journal will have the full right to remove the published article on any misconduct found in the published article.
