Credit risk management and the performance of Nigeriandeposit money banks

We have used a multiple regression model to identify the impacts of the variables of credit risk managementon the Nigerian deposit money banks’ performance from 2000 to 2020. The estimation was completed usingthe ordinary least squares method with E-Views 12. The data was sourced from the Nigerian Stock Exchange forinformation and theStatistical Bulletinof the Central Bank of Nigeria. The outcome determined that return on equity(ROE) is negatively correlated with the nonperforming loan/loan and advances ratio. Last but not least, the ROEmeasurements of the deposit money banks in Nigeria show a substantial correlation between the ratios of advancesand loans to nonperforming loans, loan loss provision to loans and advances, and capital adequacy. These ratiosare positively correlated with each other and negatively correlated with the capital adequacy ratio. We adviseeffective surveillance of pre- and post-deposit financial institution loans for the early detection of problematic debtsthat won’t be repaid according to schedule and for the thorough analysis of prospective projects as indicated inthe financial statement given by the intended client (cash budget, income statement). Accurate identification ofrealistic projects and repayment terms based on the customer’s past performance will be achieved.