Credit Risk and Bank Performance in Nigeria
Journal Title: Saudi Journal of Economics and Finance - Year 2018, Vol 2, Issue 1
Abstract
Abstract:The study investigated the impact of credit risk on bank performance in Nigeria between 1990 and 2006. From the literature, non-performing loans have been used as proxy for credit risk. However, other variables such as total deposits, loan and advances and lending rate are used as other independent variables in the model while return on asset ROA is used as bank performance indicator. Cointegartion and error correction model is adopted and the results show that credit risk as proxy by non-performing loans has significant positive impact on bank performance in the short run but in the long run, the impacts turn negative. Also a strong linkage is found between loan and advances and credit risk as well as lending rate and credit risk. The study recommends that banks should guide against accumulation of nonperforming loans in order to reduce their vulnerability to credit risk. Keywords:Credit risk, non-performing loans, bank performance.
Authors and Affiliations
Aladesanmi KA
Keywords
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