Bose Rosemary Odion, Abdulmalik Abubakar Yusuf, Halima Shuaibu


Despite the reported importance of credit risk management on profitability of firms in the literature, there still exist a gap to be filled, as very few studies have empirically examined the relationship between credit risk management and profitability, especially in developing economies like that of Nigeria. Consequently, this study examined the effect of credit risk management on the profitability of deposit money banks in Nigeria using non-performing loans, loan loss provision and growth in interest earnings on loans and advances as proxies for credit risk management. Therefore, for a period of 5 years, between 2015 and 2021, the impact of these proxies on the profitability of posit money banks was analyzed in this study using correlation and regression analysis processed on STATA 13 statistical software. Three hypotheses were formulated in null form and were tested by the study. Based on the empirical analysis, the study found a positive non-significant relationship between non-performing loans and profitability. The study also found a positive insignificant relationship between loan loss provision and bank profitability. On the contrary, the study found a negative but significant relationship between growth in interest earnings on loans and advances and the profitability of deposit money banks. Therefore, it is recommended that given the current supervisory and regulatory policy frameworks for banks, credit risk managers should be less concerned with adjustments in the ratios of non-performing loan and loan loss provision as the values of these ratios have no significant effects on performance but should instead be more prudent on the management of the growth in interest earnings on loans and advances as it has a significant effect on performance.


Non-performing loans, Loan loss provision, Interest earnings, credit risk management, profitability.

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