A Review of the Effect of Credit Risk Management on Financial Performance of JAIZ BankNigeria (2015-2020)
Authors/Creators
- 1. Department of Business Administration, Faculty of Management, Federal University of Kashere
- 2. Department of Business Administration, Nile University, Nigeria
- 3. Department of Business Administration and Entrepreneurship, Faculty of Management Sciences, Bayero University Kano-Nigeria
- 4. Postgraduate Student, Department of Business Administration, Faculty of Arts and Management Sciences, Gombe State University, Nigeria
Description
Credit risk management of Deposit Money Banks (DMBs) has turn out to be more central not only because of the
financial difficulty that the entire banking industry is facing but as an essential concept which determines the
industries’ survival, growth and financial performance. The main aim of this review study is to conceptually review
the effect of credit risk management on financial performance of JAIZ bank in Nigeria. Twenty 25 selected and
relevant literatures were reviewed which were used to analyze for five years (2015 – 2020). Return on Equity
(ROE) and Return on Asset (ROA) were used as the performance indicators while Loans-to-Deposit Ratio (LDR),
Non-Performing Loans (NPL) and Capital Adequacy Ratio (CAR) as credit risk management indicators. The
findings indicated that credit risk management has a significant impact on financial performance of JAIZ bank in
Nigeria. It is therefore advocated that to enhance financial performance and minimize the risk of non-performing
loans in the future, JAIZ bank management must watch very carefully the loans’ performance and analyze
thoroughly the clients’ credit payments history as well as their debts accumulated prior to any approval of loan
applications to be granted to them. Furthermore, Deposit Money Banks financial managers should continuously
improve firm’s assets utilization, liquidity, and techniques of managing operating costs, improve the effect of
capital adequacy, and the use of deposits for lending activities from a weak positive impact to a significant positive
impact on their liquidity and 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.