ABSTRACT

This study focuses on the effect of credit management on the performance of deposit money banks in Nigeria (a case study of first bank PLC). In the management set-up, credit control and management is a vital and indispensable tool, which aid the performance of financial and lending institution. While there is considerable evidence on the link between credit management and performance of deposit money banks, the causality between them remains a subject of investigation. This study used a time series variable computed from First bank of Nigeria annual report covering a period of 10 years that is from 2007 to 2016. The study utilized data from secondary sources. To this end, two hypothesis were developed and tested using simple regression model since it enables the test or prediction of one variable on the basis of another variable. The results of the study discovered that the estimated coefficient of the regression parameters have positive signs and thus conforms to the a-priori expectation. The implication of this sign is that the dependent variables - return on assets and return on equity are positively influenced by loan loss provision. An increase in the explanatory variable (loan loss provision) would bring about an increase in return on assets and return on equity. Meaning that loan loss provision has a significant positive effect on return on assets and return on equity of deposit money banks in Nigeria. Thus this study recommends that there should be loan loss provisioning, strict adherence to the principle of good lending, there should be loan loss monitoring and an effective internal control system should be put in place capable of frustrating and stopping stqffs manipulation of bank credit policies for selfish ends.