ABSTRACT

The study appraised the effect of credit management on bank profitability in Nigeria from 1995 to 2017. Data used for the study was sourced from Central Bank of Nigeria Statistical Bulletin and Nigerian Deposit Insurance Corporation Annual Report. Bank profitability was proxied by return on assets while lending and credit management were measured by loans and advances, non-performing loans, lending rate and loan loss provision. The tool for data analysis was multiple regression based on Ordinary Least Squares technique. It was found that commercial banks loans and advances had a positive and significant effect on profitability, while non-performing loans ratio had a negative but significant effect during the study period. On the other hand, the effect of lending rate and loan loss provision were insignificant. Based on the findings, it was recommended among other things that commercial banks in Nigeria should strictly adhere to their credit appraisal policies which ensures that only credit worthy borrowers have access to loanable funds. 

TABLE OF CONTENTS

Title Page i

Declaration ii

Certification iii

Dedication iv

Acknowledgements v

Table of Contents vi

Lists of Tables vii

Abstract viii

Title Page

CHAPTER ONE

1.0 Introduction 1

1.1 Background of the Study 1

1.2 Statement of the Problem 3

1.3 Objectives of the Study 5

1.4 Research Questions 5

1.5 Research Hypotheses 5

1.6 Scope of the Study 6

1.7 Significance of the Study 6

1.8 Limitation of the Study 7

CHAPTER TWO

2.0 Literature Review 8

2.1 Conceptual Framework 8

2.1.1 Overview of commercial banks’ lending and credit management 8

2.1.2 Credit risk management 10

2.1.3 Indicators of credit risk management 11

2.1.4 Principles of bank lending and credit management 14

2.1.5 Credit risk management strategies 16

2.1.6 The benefits of effective credit risk management 18

2.1.7 Bank profitability (Return on Assets) 19

2.2 Theoretical Framework 21

2.2.1 Loan pricing theory 21

2.2.2 Financial repression hypothesis 21

2.2.3 Financial economic theory 22

2.3 Empirical Review 23

CHAPTER THREE

3.0 Research Methodology 38

3.1 Research Design 38

3.2 Nature and Sources of Data 38

3.3 Method of Data Analysis 38

3.4 Model Specification 39

3.5 Description of Research Variables in the Model 39

3.5.1 Dependent variable 40

3.5.2 Explanatory variables 40

3.6 Estimation Procedure 41

3.6.1 Ordinary least squares (OLS) technique 41

3.6.2 t-Statistic 41

3.6.3 F-statistic 42

3.6.4 Adjusted coefficient of multiple determination (R ̅^2 ) 42

CHAPTER FOUR

4.0 Presentation of Data, Analysis and Discussion 43

4.1 Presentation of Data 43

4.2 Descriptive Analysis 44

4.3 Analysis, Discussion of Findings and Hypotheses Testing 44

4.3.1 Correlation Analysis 44

4.3.2 Regression Analysis 46

4.3.3 Test of Hypotheses 48

4.4 Discussion of Results 49

CHAPTER FIVE

5.0 Summary of Findings, Conclusion and Discussion 51

5.1 Summary of Findings 51

5.2 Conclusion 51

5.3 Recommendations 52

References 53

Appendix 57