{"id":23185,"date":"2026-01-21T11:12:18","date_gmt":"2026-01-21T11:12:18","guid":{"rendered":"https:\/\/journals.amssr.org\/grjaf\/?p=23185"},"modified":"2026-01-21T11:12:29","modified_gmt":"2026-01-21T11:12:29","slug":"studying-the-links-between-credit-risk-management-and-profitability-of-dmbs-in-nigeria","status":"publish","type":"post","link":"https:\/\/journals.amssr.org\/grjaf\/2026\/01\/21\/studying-the-links-between-credit-risk-management-and-profitability-of-dmbs-in-nigeria\/","title":{"rendered":"Studying the Link(s) between Credit Risk Management and Profitability of DMBs in Nigeria"},"content":{"rendered":"\n<p>Download PDF<br><\/p>\n\n\n\n<div data-wp-interactive=\"core\/file\" class=\"wp-block-file\"><object data-wp-bind--hidden=\"!state.hasPdfPreview\" hidden class=\"wp-block-file__embed\" data=\"https:\/\/journals.amssr.org\/grjaf\/wp-content\/uploads\/sites\/2\/2026\/01\/Studying-the-Links-between-Credit-Risk-Management-and-Profitability-of-DMBs-in-Nigeria.docx.pdf\" type=\"application\/pdf\" style=\"width:100%;height:600px\" aria-label=\"Embed of Studying the Link(s) between Credit Risk Management and Profitability of DMBs in Nigeria.docx.\"><\/object><a id=\"wp-block-file--media-ab237a24-37c2-4d4a-90c8-c8ffc8c9eb46\" href=\"https:\/\/journals.amssr.org\/grjaf\/wp-content\/uploads\/sites\/2\/2026\/01\/Studying-the-Links-between-Credit-Risk-Management-and-Profitability-of-DMBs-in-Nigeria.docx.pdf\">Studying the Link(s) between Credit Risk Management and Profitability of DMBs in Nigeria.docx<\/a><a href=\"https:\/\/journals.amssr.org\/grjaf\/wp-content\/uploads\/sites\/2\/2026\/01\/Studying-the-Links-between-Credit-Risk-Management-and-Profitability-of-DMBs-in-Nigeria.docx.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-ab237a24-37c2-4d4a-90c8-c8ffc8c9eb46\">Download<\/a><\/div>\n\n\n\n<p>Authors<\/p>\n\n\n\n<p><sup>1 <\/sup>Chukwunyelu, Ngozi Blessing<\/p>\n\n\n\n<p><sup>2 <\/sup>Nnado Ifeanyi Celestine<\/p>\n\n\n\n<p><sup>3 <\/sup>Nwankwo, Geraldine Chinyere<\/p>\n\n\n\n<p><sup>4 <\/sup>Ejike, Chukwuma Kenneth<\/p>\n\n\n\n<p><sup>5 <\/sup>Ani, Uchenna Gloria<\/p>\n\n\n\n<p><sup>1,2,3,4 &amp;5 <\/sup>Department of Accountancy, Enugu State University of Science and Technology, Enugu<\/p>\n\n\n\n<p><sup>2 <\/sup>Corresponding Author &amp; email addresses: <a href=\"mailto:ifeanyi_eck@yahoo.com\">ifeanyi_eck@yahoo.com<\/a>; +2348038113063<\/p>\n\n\n\n<p><strong>ABSTRACT<\/strong><\/p>\n\n\n\n<p>The study examined the effect of credit risk management on profitability of deposit money banks (DMBs) in Nigeria. Specifically, it analyzed the impact of non-performing loans (NPL), loan loss provision (LLP), and capital adequacy (CAR) on return on assets (ROA) of sampled firms. Panel least squares, specifically, Prais-Winsten panel corrected standard errors (PCSEs) regression were used to analyze the collated data. The Prais-Winsten regression correlated panels corrected standard errors (PCSEs<strong><em>) <\/em><\/strong>examined how npltta, llptta, cartta, and lnta affect roa. In respect to the coefficients, npltta has a coefficient (-9.5123). It implies that a unit increase in npltta reduces roa by 9.512 units. Further, this exertion is statistically strong given the p-value = 0.028 &lt; 5% and t-statistic = -2.20. Conversely, llptta exerted a positive albeit nonsignificant influence on roa (coefficient = 7.72, p-value = 0.501 > 5% and t-statistic = 0.67). This implies that a unit increase in llptta increases roa by 7.72 units. cartta exerted a statistically very strong negative impact on roa (coefficient = -0.568, p-value = 0.005 &lt; 5% and t-statistic = -2.83). This is most likely to emanate from an increased dividend \/ payout ratio. The adjusted R\u00b2 value is 0.6323 i.e. 63.23% of the changes in the regressand are explained by the model predictors including the control variable. The F-statistic, a measure of the combined influence of all explanatory variables, is 40.36 and the corresponding p-value = 0.000. That is, the overall effect is very strong statistically. <em>Nonetheless, original value of Durbin-Watson statistic DW = 0.5338 signals the presence of autocorrelation and other diagnostic issues hitherto corrected using PCSEs and transformed DW.<\/em> Findings suggest that non-performing loans (npltta), capital adequacy (cartta) and natural logarithm of total assets (lnta) negatively and strongly influence profitability (roa) while only loan loss provision (llptta) exerted a nonsignificant positive impact on profitability. Further, DMBs adopting comprehensive procedures for appraising, monitoring and recovering loans, assessing borrowers\u2019 creditworthiness is deemed necessary if not imperative to minimize NPL, LLP.<\/p>\n\n\n\n<p><strong>Key words: <\/strong>Credit risk, return on assets, DMBs.<\/p>\n\n\n\n<p><strong>REFERENCES<\/strong><\/p>\n\n\n\n<p>Adegbite, E., &amp; Olayemi, A. (2020). Loan loss provisions and profitability of Nigerian banks. <em>International Journal of Economics, Commerce and Management, 8<\/em>(7), 123\u2013137.&nbsp;<\/p>\n\n\n\n<p>Ajagbe, S. T., Jubril, T. S. &amp; Kareem, I. A. (2024). Impact of financial risk management on performance of Nigerian commercial banks. <em>Journal of Management and Social Science Research,<\/em> 5(1), 37 \u2013 55.<\/p>\n\n\n\n<p>Akerlof, G. A. (1970). The market for \u201clemons\u201d: Quality uncertainty and the market mechanism. <em>Quarterly Journal of Economics, 84<\/em>(3), 488\u2013500.&nbsp;<\/p>\n\n\n\n<p>Amakwe, R. N., Nwankwo, A. H., Ndukwe,O. D., John, U. I. &amp; Ude, O. O. (2025). Impact of risk asset management on financial performance of listed deposit money banks in Nigeria. <em>Archives of Current Research International, <\/em>25 (9), 438-458.<\/p>\n\n\n\n<p>Amijaya, R. N. F., &amp; Alaika, R. (2023). Does financial risk matter for financial performance in Sharia banks?&nbsp;<em>Jurnal Ilmu Ekonomi Terapan<\/em>,&nbsp;<em>8<\/em>(1), 24-40.&nbsp;<\/p>\n\n\n\n<p>Asogwa, J. O., Ogbonna, J. I., Okanya, V. A. &amp; Oluka, S. N. (2025). Appraisal of risk management approaches in construction businesses: Implications for multidisciplinary construction teams in Enugu State. <em>Industrial Technology Education Research Journal (ITERJ),<\/em> 8(1), 96-108.<\/p>\n\n\n\n<p>Basel Committee on Banking Supervision. (2020). <em>Principles for the management of credit risk<\/em>. Bank for International Settlements.<\/p>\n\n\n\n<p>Cheng, L., Nsiah, T. K., Charles, O. &amp; Ayisi, I. L. (2020). Credit risk, operational risk, liquidity risk on profitability. A study on South Africa commercial. <em>Revista Argentina de Cl\u00ednica Psicol\u00f3gica, XXIX(5),<\/em> 5-18. https:\/\/doi.org\/10.24205\/03276716.2020.1002&nbsp;<\/p>\n\n\n\n<p>\u00c7ollakua, B. &amp; Aliu, M. (2021). Impact of non-performing loans on bank\u2019s profitability: Empirical evidence from commercial banks in Kosovo. <em>Journal of Accounting, Finance and Auditing Studies<\/em>, 7(3), 226-242.<\/p>\n\n\n\n<p>Ezu, G. K., Nwanna, I. O., &amp; Eke-Jeff, O. M. (2023). Effect of capital adequacy on the performance of deposit money banks in Nigeria. <em>International Journal of Novel Research in Marketing Management and Economics, 10(1),<\/em> 53-63. DOI: 10.5281\/zenodo.7774547.<\/p>\n\n\n\n<p>Gana, U., Tijjani, M. S. &amp; Abubakar, S. (2022). Effect of credit risk on financial performance of listed deposit money banks in Nigeria. <em>Gusau International Journal of Management and Social Science, 5(1),<\/em> 49-65.&nbsp;<\/p>\n\n\n\n<p>Ibianga, A. G. &amp; Enyi, H. C. (2024). Federally collected tax revenue and economic growth in Nigeria.&nbsp;<em>Journal of Economy, Tourism and Service<\/em>,&nbsp;<em>3<\/em>(2), 57-66. <a href=\"https:\/\/jets.innovascience.uz\/index.php\/jets\/article\/view\/182\" target=\"_blank\" rel=\"noopener\">https:\/\/jets.innovascience.uz\/index.php\/jets\/article\/view\/182<\/a><\/p>\n\n\n\n<p>Munangi, E., &amp; Sibindi, A. B. (2020). An empirical analysis of the impact of credit risk on the financial performance of South African banks.&nbsp;<em>Academy of Accounting and Financial Studies Journal<\/em>,&nbsp;<em>24<\/em>(3), 1-15.<\/p>\n\n\n\n<p>Musa, I. &amp; Oloruntoba, O. (2022). Credit risk management and financial performance of quoted deposit money banks in Nigeria. <em>Journal of Leadership, Accounting Development and Investigation Research, 6(1),<\/em> 186-196.<\/p>\n\n\n\n<p>Odebode, O. K., Ezi, C. T., &amp; Ishioro, B. O. (2024). Effects of non-performing loans on return on equity of selected commercial banks in Nigeria.&nbsp;<em>World Journal of Advanced Research and Reviews<\/em>,&nbsp;<em>21<\/em>(1), 2599-2608.<\/p>\n\n\n\n<p>Ojiegbe, J. N. (2024). Capital adequacy and profit before tax of deposit money banks in Nigeria. <em>Journal of Accounting and Financial Management, 10(4),<\/em> 107-119. DOI: 10.56201\/jafm.v10.no4.2024.pg107.119.<\/p>\n\n\n\n<p>Okafor, C., &amp; Eze, O. (2023). Regulatory policies and credit risk management in Nigerian banks. <em>International Journal of Economics, Finance and Management Sciences, 11<\/em>(1), 15\u201325.<\/p>\n\n\n\n<p>Olawale, A. (2024). Capital adequacy and financial stability: A study of Nigerian banks&#8217; resilience in a volatile economy.&nbsp;<em>GSC Advanced Research and Reviews<\/em>,&nbsp;<em>21<\/em>(1), 001-012.<\/p>\n\n\n\n<p>Spence, M. (1973). Job market signaling. <em>Quarterly Journal of Economics, 87<\/em>(3), 355\u2013374.&nbsp;<\/p>\n\n\n\n<p>Stiglitz, J. E., &amp; Weiss, A. (1981). Credit rationing in markets with imperfect information. <em>American Economic Review, 71<\/em>(3), 393\u2013410.Ugwu, P. &amp; Okwo, I. M. (2025). Effect of credit risk management on the financial performance of deposit money banks (DMBs) in Nigeria. <em>European Journal of Accounting, Auditing and Finance Research, <\/em>13(9), 83-95.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Download PDF Authors 1 Chukwunyelu, Ngozi Blessing 2 Nnado Ifeanyi Celestine 3 Nwankwo, Geraldine Chinyere 4 Ejike, Chukwuma Kenneth 5 Ani, Uchenna Gloria 1,2,3,4 &amp;5 Department of Accountancy, Enugu State University of Science and Technology, Enugu 2 Corresponding Author &amp; email addresses: ifeanyi_eck@yahoo.com; +2348038113063 ABSTRACT The study examined the effect of credit risk management on profitability of deposit money banks (DMBs) in Nigeria. Specifically, it analyzed the impact of non-performing loans (NPL), loan loss provision (LLP), and capital adequacy (CAR) [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":21742,"comment_status":"open","ping_status":"0","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[335,621,619],"tags":[],"class_list":["post-23185","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-grjaf","category-vol-6-issue-2","category-volume-6"],"_links":{"self":[{"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/posts\/23185","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/comments?post=23185"}],"version-history":[{"count":1,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/posts\/23185\/revisions"}],"predecessor-version":[{"id":23187,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/posts\/23185\/revisions\/23187"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/media\/21742"}],"wp:attachment":[{"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/media?parent=23185"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/categories?post=23185"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/tags?post=23185"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}