scholarly journals Analysis of Credit Risk, Intellectual Capital and Financial Performance of Listed Deposit Money Banks in Nigeria

2021 ◽  
Vol 06 (12) ◽  
Author(s):  
Rislanudeen Muhammad ◽  
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Intellectual Capital ◽  
Capital Adequacy ◽  
National Bureau ◽  
Credit Risk Management ◽  
Loan Loss ◽  
Management Culture ◽  
Capital Adequacy Ratio

This paper examined the effects of credit risk, intellectual capital as well as credit risk moderated by intellectual capital on financial performance of fifteen listed deposit money banks in Nigeria (DMBs) from 2007 to 2016. Data were sourced from annual reports of banks and Nigerian National Bureau of Statistics and analysed using Generalised Method of Moments (GMM). The study finds that credit risk index by loan loss ratio negatively affects financial performance of the sampled banks; while capital employed efficiency, loan loss provision moderated by intellectual capital, capital adequacy ratio, income and diversification have positive relationship with banks’ financial performance. Thus, the study recommends that banks should strengthen their credit risk management culture to ensure prompt repayment of loans. The banks should operate within the required capital adequacy ratio to serve as buffer against loan loss provisions provided by the Central Bank of Nigeria. A strong credit risk management culture should be embedded within intellectual capital structure of banks, where all persons at all levels appreciate and understand the banks’ risk management policies as well as strategies and incorporate same into decision-making and business processes.

scholarly journals Effect of Credit Risk Management on Financial Performance Of Nepalese Commercial Banks

2022 ◽  
Vol 10 (1) ◽  
pp. 19-30
Author(s):  
Dr. Guna Raj Chhetri
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Significant Relationship ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Negative Effects ◽  
Management Quality ◽  
Capital Adequacy Ratio

The main purpose of this study is to investigate the effect of credit risk on the financial performance of commercial banks in Nepal. The panel data of seventeen commercial banks with 85 observations for the period of 2015 to 2020 have been analyzed. The regression model revealed that non – performing loan (NPLR) has negative and statistically significant impact on financial performance (ROA).Capital adequacy ratio (CAR) and bank size (BS) have negative and statistically no significant impact on financial performance (ROA). Credit to deposit (CDR) has positive but no significant relationship with the financial performance (ROA) and the study concluded that the management quality ratio (MQR) has positive and significant relationship with the financial performance (ROA) of the commercial banks in Nepal. The study recommends that, it is fundamental for Nepalese commercial banks to practice scientific credit risk management, improve their efficacy in credit analysis and loan management to secure as much as possible their assets, and minimize the high incidence of non-performing loans and their negative effects on financial performance.

scholarly journals Pengaruh Credit Risk Management Pada Financial Performance Bank Konvensional Yang Terdaftar di BEI

2021 ◽  
Vol 26 (3) ◽  
pp. 447
Author(s):  
Ervina, Vivi N. Fatimah, H.S.Lestari
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Secondary Data ◽  
Sampling Technique ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Capital Adequacy Ratio ◽  
Conventional Banks ◽  
The Impact

The purpose of this study is to analyze the impact of credit risk management on the financial performance of Indonesian conventional banks in 2016-2020. The sample in this study was 32 conventional banks from 160 observations using purposive sampling technique and secondary data. The dependent variable in this paper is measured by profitability using the return on assets proxy while credit risk management as an independent variable. From the research results, LDR and NPLR have no effect on financial performance. CAR has a positive influence on financial performance so that bank managers are expected to be able to maintain their capital adequacy ratio in accordance with the provisions set by Bank Indonesia to maintain their financial performance because a high capital adequacy ratio is considered safe and tends to meet its financial obligations, while CIR and LDR negative effect on financial performance. By increasing the ratio of costs to income indicates a low level of efficiency in banking operational costs, and low liquid assets will increase cash reserves to reduce liquidity risk. Investors can invest their funds in banks that have a high capital adequacy ratio, cost of income ratio and liquidity ratio to avoid financial risk.

scholarly journals Does Credit Risk Management affect the Financial Performance of Commercial Banks in Kosovo?

2018 ◽  
Vol 7 (2) ◽  
pp. 49-57
Author(s):  
Rrustem Asllanaj
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Multiple Regression ◽  
Commercial Banks ◽  
Multiple Regression Model ◽  
Capital Adequacy ◽  
Regression Equations ◽  
Credit Risk Management ◽  
The Impact

This study analyses the impact of credit risk management on financial performance of commercial banks in Kosovo, and comparing the relationship between the determinants of credit risk management and financial performance by using CAMEL indicators. Panel data of 85 observations from 2008 to 2012 of ten commercial banks was analysed using multiple regression model. Findings through multiple regression analysis are presented in forms of tables and regression equations. The study also elaborates whether capital adequacy, asset quality, management efficiency, earnings and liquidity have strong or weak relationship with financial performance of commercial banks. The study concludes that CAMEL model can be used as a system of assessment and rating of credit risk management by commercial banks in Kosovo.

scholarly journals The Relationship Between Credit Risk Management Practices And Profitability In Malaysian Commercial Bank`S

2019 ◽  
Vol 8 (5C) ◽  
pp. 53-59
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Management Practices ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Loan Loss ◽  
Commercial Activity ◽  
Loan Loss Provision ◽  
Loan Loss Provisions

This research scope looks into credit risk management and its effect on a specific group of banks with intensive commercial activity within Malaysia. Yearly reports from 8 different banks that rely on secondary data gathered from the span of 3 years (2015-2017), form the essence of this research. Return on assets (ROA) was primarily used in this research to measure profitability. Also, two credit risk measuring methods were used, loan loss provisions ratio (LLPR) and ratio of capital adequacy (CAR). From the results we deduced that commercial bank's profitability related positively to capital adequacy ratio and loan loss provision ratio. Therefore, the research calls upon the need of new management structure that optimally keep credit risk in check and boost banks profitability.

scholarly journals The impact of credit risk management on the financial performance of United Arab Emirates commercial banks

2021 ◽  
Vol 10 (3) ◽  
pp. 303-319
Author(s):  
Jamil Salem Al Zaidanin ◽  
Omar Jamil Al Zaidanin
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
United Arab Emirates ◽  
Commercial Banks ◽  
Positive Impact ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Capital Adequacy Ratio ◽  
Income Ratio ◽  
The Impact

The main purpose of this study is to measure up to what extent the independent factors defined by capital adequacy ratio, non-performing loans ratio, cost-income ratio, liquidity ratio, and loans-to-deposits ratio impact the financial performance of sixteen commercial banks operating in the United Arab Emirates using panel data for the period of 2013-2019. The secondary data was collected from banks and examined by applying standard descriptive statistics and the random effect model for hypothesis testing. It is concluded from the regression outcomes that non-performing loans ratio and cost-income ratio have a significant negative impact on commercial banks profitability in the United Arab Emirates, while capital adequacy ratio, liquidity ratio, and loans -to-deposits ratio all have a very weak positive relationship on the return on assets but they are not determinants of bank’s profitability due to the insignificant statistical impact on it. It is therefore suggested that to enhance financial performance and minimize the risk of non-performing loans in the future, banks must watch very carefully the loans’ performance and analyze thoroughly the clients’ credit history and ability to pay back their debts prior to any approval of loan applications. Furthermore, banks should continuously improve their assets utilization, liquidity, and techniques of managing operating costs, improve the impact of capital adequacy, and the use of deposits for lending activities from a weak positive impact to a significant positive impact on their profitability. The researchers recommend that future studies on credit risk management influence on banks’ financial performance should consider more independent variables and longer periods of study such as twenty or thirty years to have more accuracy and generalized results.  

scholarly journals Impact of risk management strategies on the credit risk faced by commercial banks of Balochistan

2019 ◽  
Vol 5 (1) ◽  
Author(s):  
Zia Ur Rehman ◽  
Noor Muhammad ◽  
Bilal Sarwar ◽  
Muhammad Asif Raz
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Quantitative Data ◽  
Management Strategies ◽  
Capital Adequacy ◽  
Regression Analyses ◽  
Credit Risk Management ◽  
Capital Adequacy Ratio ◽  
Risk Management Strategies

AbstractThis study aims to identify risk management strategies undertaken by the commercial banks of Balochistan, Pakistan, to mitigate or eliminate credit risk. The findings of the study are significant as commercial banks will understand the effectiveness of various risk management strategies and may apply them for minimizing credit risk. This explanatory study analyses the opinions of the employees of selected commercial banks about which strategies are useful for mitigating credit risk. Quantitative data was collected from 250 employees of commercial banks to perform multiple regression analyses, which were used for the analysis. The results identified four areas of impact on credit risk management (CRM): corporate governance exerts the greatest impact, followed by diversification, which plays a significant role, hedging and, finally, the bank’s Capital Adequacy Ratio. This study highlights these four risk management strategies, which are critical for commercial banks to resolve their credit risk.

scholarly journals Effect of Credit Risk Management on Financial Performance of Nigerian Listed Deposit Money Banks

2019 ◽  
Vol 5 (6) ◽  
pp. 53 ◽  
Author(s):  
KAJOLA Sunday Olugboyega ◽  
ADEDEJI Samuel Babatunji ◽  
OLABISI Jayeola ◽  
BABATOLU Ayorinde Tobi
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Capital Adequacy ◽  
Financial Health ◽  
Credit Risk Management ◽  
Return On Equity ◽  
Risk Parameters ◽  
And Control ◽  
Risk Measurements

<p>Deposit money 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 ten listed deposit money banks in Nigeria for the period, 2005-2016. Credit risk management, the independent variable, was surrogated by three parameters- Non-performing Loan to total Loan Ratio (NPLLR); Non-performing Loan to total Deposit Ratio (NPLDR) and Capital Adequacy Ratio (CAR). Return on asset (ROA) and Return on equity (ROE) was used as proxies for financial performance. Using the Random effects generalised least squares (GLS) regression as data estimation technique, the study revealed that all the three credit risk parameters have a significant relationship with ROA and ROE (p&lt; 0.05).Based on the findings, the study recommended that the management of deposit money banks should develop rigorous and robust credit policies that will enable banks to effectively assess the creditworthiness of their customers. The regulatory agencies should also come up with modern credit risk measurements, identification and control. Prompt and necessary action should also be taken against the management of any bank that flouts their credit risk guidelines in order to avoid unpleasant distress in the financial system.     </p>

scholarly journals The Impact of Credit Risk Management on the Profitability of a Commercial Bank: The Case of BGFI Bank Congo

2020 ◽  
Vol 12 (3) ◽  
pp. 21
Author(s):  
Ossou Ndzila Fred Nelson
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Negative Impact ◽  
Capital Adequacy ◽  
Risk Indicators ◽  
Positive Contribution ◽  
Credit Risk Management ◽  
Loan Loss ◽  
Management Indicators ◽  
The Impact

This study examines the impact of credit risk management on the profitability of BGFI Bank Congo, by identifying credit risk indicators and profitability measurement ratios over the period of 2010-2019. The results indicate that profitability is somewhat affected by credit risk management as measured by its credit risk management indicators. The non-performing loan ratio (NPLR), the capital assets ratio (CAR), and the loan loss provision ratio (LLPR) show a negative impact on ROE. These three ratios contribute negatively, while the CAR makes a positive contribution to Return on assets (ROA) and the ratio of client loans and short-term financing (RCLSTF) on return on equity (ROE). Thus, credit risk management has a significant impact on profitability. The study also shows that other selected credit risk management indicators have a significant impact on the Bank&#39;s profitability, such as the loan provision ratio (LLPR) and the clean capital adequacy ratio.

scholarly journals The effect of credit risk management and bank-specific factors on the financial performance of the South Asian commercial banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asima Siddique ◽  
Muhammad Asif Khan ◽  
Zeeshan Khan
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
South Asian ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Content Type ◽  
Specific Factors ◽  
Bank Specific Factors

PurposeAmong all of the world's continents, Asia is the most important continent and contributes 60% of world growth but facing the serving issue of high nonperforming loans (NPLs). Therefore, the current study aims to capture the effect of credit risk management and bank-specific factors on South Asian commercial banks' financial performance (FP). The credit risk measures used in this study were NPLs and capital adequacy ratio (CAR), while cost-efficiency ratio (CER), average lending rate (ALR) and liquidity ratio (LR) were used as bank-specific factors. On the other hand, return on equity (ROE) and return on the asset (ROA) were taken as a measure of FP.Design/methodology/approachSecondary data were collected from 19 commercial banks (10 commercial banks from Pakistan and 9 commercial banks from India) in the country for a period of 10 years from 2009 to 2018. The generalized method of moment (GMM) is used for the coefficient estimation to overcome the effects of some endogenous variables.FindingsThe results indicated that NPLs, CER and LR have significantly negatively related to FP (ROA and ROE), while CAR and ALR have significantly positively related to the FP of the Asian commercial banks.Practical implicationsThe current study result recommends that policymakers of Asian countries should create a strong financial environment by implementing that monetary policy that stimulates interest rates in this way that automatically helps to lower down the high ratio of NPLs (tied monitoring system). Liquidity position should be well maintained so that even in a high competition environment, the commercial is able to survive in that environment.Originality/valueThe present paper contributes to the prevailing literature that this is a comparison study between developed and developing countries of Asia that is a unique comparison because the study targets only one region and then on the basis of income, the results of this study are compared. Moreover, the contribution of the study is to include some accounting-based measures and market-based measures of the FP of commercial banks at a time.

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