Effects of Credit Risk Management on Performance of Deposit Money Banks in Nigeria

Transcription

1 International Journal of Research in Management & ISSN : (Online) Effects of Credit Risk Management on Performance of Deposit Money Banks in Nigeria I Lawrence B. Ajayi (PhD), II Foluso I. Ajayi I,II Dept. of Banking and Finance, Faculty of Management Sciences, Ekiti State University, Ado-Ekiti, Nigeria Abstract This study examined the effects of credit risk management on the performance of deposit money banks in Nigeria from The study employed panel regression analysis in which Profit after Tax (PAT) was used as proxy for bank performance while Non-Performing Loan Ratio (NPLR), Loan Loss Provision Ratio (LLPR), Loan to Total Asset Ratio (LTAR) and Cost per Loan Ratio (CPLR) were used as indicators of credit risk management. Fixed effect, random effect and Hausman test were conducted on the variables. This study revealed that banks profitability is negatively influenced by NPLR, LLPR and CPLR. While LTAR influences performance of banks positively. The study therefore concluded that deposit money banks in Nigeria have a high growth rates on loans and advances, with corresponding high rate of non-performing loans by customers. Also, the provisions for loan loss were slightly below the required amount 8% by Basel Accord with high administration costs. The study recommended that Nigerian banks should ensure high quality credit management and strict adherence to professional banking ethics. Also, deposit money banks should make adequate effort toward deposit mobilization and reduce credit administrative cost so as to be more efficient and enhance profitability. Keywords Credit risk management, Non-performing loan, Loan Loss Provision, Loan to Total Asset, Cost per Loan, Deposit money Banks, Bank performance, Basel Accord I. Introduction Deposit money banks are major players in the financial sector of every economy. The failure or success of these banks will have either positive or negative impact on the economy. According to [23], some deposit money banks have been wound as a result of poor management of their credit risk. High level of non-performing loans in the balance sheet reduces bank s profitability and thereby affects performance of banks. According to [12] banks are exposed to a large number of risks which include liquidity risk, credit risk, foreign exchange risk, market risk, interest rate risk among others. These risks have to be well managed in order to ensure their survival and profitability. Banks are expected to have credit administration department that ensures proper maintenance and administration of credits. [7], asserted that credit risk management is important to bank management because banks are risk machines they take risks and transform them to banking products and services. Risks are uncertainties due to variations in expected returns. The dictum in finance says that The higher the risk, the higher the return. Therefore, risk can be opportunity or threat. In order to get higher returns, bank can either take an increased risk or lower operating costs. Thus, managers must evaluate and balance the tradeoffs between risk and returns ([13]). The Nigerian banking industry has been affected by the deteriorating quality of its credit assets as a result of the significant fall in equity market indices, global oil prices, accumulation of non-performing loans and the continuous depreciation of the naira against global currencies ([13]). Non-performing loan (NPL) reduces the liquidity of banks, credit expansion and it slows down the growth of the real sector with direct consequences on the performance of banks, this prompted the Federal Government of Nigeria to establish the Asset Management Corporation of Nigeria (AMCON) in July, 2010 to provide a lasting solution to the recurring problems of nonperforming loans that bedeviled Nigerian banks ([15]). Other efforts by the Central Bank of Nigeria (CBN) to ensure sound and efficient Financial Institutions performance are the recapitalization policy of July 2004, issuance of Prudential Guidelines, establishment of Nigeria Deposit Insurance Corporation (NDIC) in 1988 to protect depositors funds, Minimum Reserve Requirements, Discount Rate, Fines and Sanctioning of Management, withdrawal of Licenses, on and off Balance Sheet Examinations etc. Despite all these measures by the CBN to ensure sound and efficient financial institutions in the country, the ratios of non-performing loans keep on rising on daily basis. All the aforementioned challenges are caused by poor credit risk management, which suggest that something must be done to save the existing banks from further collapse by re-examining the effects of credit risk on the performance of deposit money banks in Nigeria. II. Literature Review Conceptual, Theoretical and Empirical Reviews Concept of Credit Risk Management According to [10], credit risk can be defined as the risk of default or of reductions in market value caused by changes in the credit quality of issuers or counter-parties. Credit risk is the probability that a financial institution will incur losses as a result of customers inability to meet their contractual obligations to repay debts in agreed terms. One of the basic functions of bank management is credit risk management, it is the process of identifying, measuring, monitoring, and controlling the risk arising from the possibility of default in loan repayments. Since the business of banking is credit and it is the primary basis on which bank s quality and performance are judged then, credit risk management lies at the heart of deposit money banking. Credit risk can be caused by a variety of reasons which can be from internal and external sources. The main causes of credit risk documented in the literature include; poor governance and management control, inappropriate credit policies, inappropriate laws, volatile interest rates, low capital and liquidity levels, massive licensing of banks, reckless lending, poor credit assessment, absence of loan concentration limits for various sector, inadequate values of collaterals, liberal loan sanctioning powers for bank executives without checks and balance, lack of information on functioning of various industries and performance of economy, poor lending practices, government interference and inadequate supervision by the central bank ([18]; [22], [20] & 2014, IJRMBS All Rights Reserved 50

2 ISSN : (Online) International Journal of Research in Management & [3],). Whereas, the extent of credit risk incurred varies across sectors and countries. Bank s Performance Bank s performance has attracted the interest of academic research as well as of Bank management, supervisors, financial markets and other stakeholders. Profitability is the primary goal of all businesses and this is synonymous to performance. There are various measures of bank performance and the choice of the specific performance measure depends on the objective of the study. In the literature, the performance measures are: Return on Assets (ROA), Return on Equity (ROE), Profit after Tax (PAT), and cost to income ratio (CIR) and net interest margin (NIM) ([24]). Thus, choice of the best measure of performance is tedious task. Moreover, studying the bank performance concept may generate different results depending on the nature of the stakeholders which analyze the term. Such multitude of opinions opens new directions in banking performance research, but this study points out single classical performance indicator PAT which expresses the risk taking behavour of bank management in obtaining the satisfied level of profit. Theoretical Literature Modern Portfolio Theory (MPT) Modern Portfolio theory was introduced by Harry Markowitz in It attempts to maximize portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return, by carefully choosing the proportions of various assets. The portfolio theory integrates the process of efficient portfolio formation to the pricing of individual assets. It emphasized that risk is an inherent part of higher reward. The theory also explained that some sources of risk associated with individual assets can be eliminated or diversified away, by holding a proper combination of assets ([8]). Some of the issues not addressed by the theory include; how banks can form a portfolio of loans that minimize risk and maximize return. It does not outline ways of determining a risk free portfolio. Lastly, the theory does not address various risks that are faced by banks when managing a loan portfolio. Therefore, the theory cannot apply holistically when managing credit risk in banks. Asymmetry Theory The theory was developed in the early 1970s by these three economists: George Akerlof, Michael Spence and Joseph Stiglitz. Information asymmetry arises when a borrower has better information about the potential risks and returns associated with investment projects than the lender. It may be difficult to distinguish between good and bad borrowers, which may result into adverse selection and moral hazards problems which have led to significant accumulation of nonperforming loans in banks. The theory argues that, the person possessing more information on a particular item for transaction is in a position to negotiate appropriate terms for the transaction than the other party ([6],) in [19]). Theory of Multiple Lending In this theory, deposit money banks are allowed to be less inclined to share lending which is in other word, referred to as loan syndication. The theory can operate where there is a welldeveloped equity market and after a process consolidation. It is also noted that, both outside equity and mergers and/or acquisition enhances lending capacity of banks, thus minimizing the need for greater diversification and monitoring through share lending. The theory is highly applicable in deposit money banks because their primary job is lending. In line with the theory of multiple lending, it is fundamental for deposit money banks to assess their lending capacity prior to advancing any credit to prospective borrowers. Empirical Literature Credit Risk Management is a serious threat to the performance of banks; therefore various researchers have examined the effects of credit risk management on banks in varying dimensions. Some empirical literatures found a negative relationship between credit risk and Bank s performance while others found positive relationship. In their study Credit Risk management and Profitability in Deposit money Banks in Sweden Ara, Bakaeva and Sun (2009) they observed that credit risk management has effect on performance of the financial institutions. Regression model was used on the data collected from the sample banks annual report from The study found that the impact of credit risk management on the financial performance is not the same on all four deposit money banks sampled. They recommended that Banks should improve on credit risk management strategies to improve their profitability. [2], studied the impact of bank s specific risk characteristics, and the overall banking environment on the performance of 43 deposit money banks operating in 6 of the Gulf Cooperation Council (GCC) countries from Fixed effect regression analysis was used. The results showed that credit risk, liquidity risk and capital risk were the major factors that affect bank performance measured by return on assets while liquidity risk only affects return on equity. He recommended that bank should be more efficient in risk management. [15], carried out an investigation into the quantitative effects of credit risk on the performance of five deposit money banks in Nigeria over the period of 11 years ( ). Panel model analysis was adopted to estimate the determinants of the profit function. The results showed that the effect of credit risk on bank performance is cross-sectional invariant. They recommended that banks in Nigeria should enhance their capacity in credit analysis and loan administration while the regulatory authority should pay more attention to banks compliance to relevant provisions of the Bank and guidelines. [21], evaluated the impact of credit risk management on bank profitability of some selected deposit money banks in Nigeria using econometric analysis method on annual time series data of ten banks over the period of 2006 to The results from Panel Least Square (PLS) estimate found that that credit risk management had a significant impact on the profitability of Nigeria banks. They therefore suggested that, management need to be cautious in setting up a credit policy that might not negatively affects profitability and also they need to know how credit policy affects the operation of their banks to ensure judicious utilization of deposits. Also that capitalization and total assets of the bank should be periodically evaluated. [16], focused on the effect of loan management on performance of Nigerian banks. Data were obtained from financial report of selected banks in Nigeria. The data were analyzed by the use of regression. The test revealed that there is no significant relationship between effective loan management and the performance of banks. All Rights Reserved, IJRMBS

3 International Journal of Research in Management & ISSN : (Online) He recommended that effective management of loan portfolio and credit risk be strictly adhered to, and they should be continuously checked for proper management. III. Material and Method Model Specification The study modified the model used by [21], which expressed profitability and return on asset (ROA) as functions of the ratios of total credit to total asset and non-performing loans to total loan respectively. The model is specified as: Profitability = ROA The equation 1 can be rewriting as Profitability = ROA LA = Loan & Advances TA = Total Asset NPL = Non-performing Loan TL = Total Loan f = functional notation Equation 2 is modified for the purpose of this study by the inclusion of CPLR, LLPR and the replacement of ROA with PAT. Profit after Tax (PAT) is used as a measure of performance since it has direct effect on credit risk management indicators like loan loss provision and non-performing loans unlike ROA and ROE which do not include risk adjustment. Hence there is no comparability from one borrower to another, because their credit risk differs from one trading transaction to another. Also, the market varies across products ([7]). Therefore this study used PAT as measure of banks performance. The modified model is: µ= Error Term i, t = Bank i at time t ß 0 = Constant parameter/intercept ß 1 - ß 4 = Coefficient of independent variables Because of the time series and cross sectional nature of the data, fixed effect test, random effect test, and Hausman test were performed on the data. It is expected apriori that PAT 0; PAT 0; PAT 0; PAT 0 NPLR LLPR CPLR LTAR Variables Descriptions and Sources Dependent variable The dependent variable is Profit after Tax (PAT): It is considered the net profit after deduction of all expenses and taxes. PAT is the figure that tells us most directly how well the bank is doing because it is the amount that the bank has available to keep as retained earnings or to pay out to stockholders as dividends Independent Variables The Independent variable is credit risk management and the proxies are Capital Adequacy Ratio, Non-Performing Loan Ratio, Loan Loss Provision Ratio, Loan Loss to Deposit Ratio, Loan to Total Asset Ratio and Cost per Loan Non-Performing Loan Ratio (NPLR) is the ratio of nonperforming loans to total loans for a period. It gives an assessment of the total borrowers default on the conditions of loans and advances for a given period. It simply measures the efficiency of the loan portfolio management for a given bank within a given period ([4]; [15]). NPLR can be calculated as: NPLR = Non-performing Loans Total Loan Loan Loss Provision Ratio (LLPR): A loan loss reserve is a reserve that enables banks to recognize in their profit and loss statements the expected loss from a particular loan portfolio. Depositors are protected against unexpected loss through capital adequacy reserve and protected against anticipated loss through loan loss provision reserve. LLPR will be used in this study to identify the level of bank mangers expectation about quality of bank asset in Nigeria. Increase in LLP will give rise to decrease in quality of asset. Loan Loss Provision Ratio (LLPR) = Loan Loss Provision Total Loan Loan to Total Asset Ratio (LTAR) is a ratio that measures the exposure level of the Bank to credit risk known as loan match. Banks with higher loan to total asset ratio have high exposure to credit risk. It can be calculated as: LTAR = Total Loan Total Asset Estimation Techniques The specified model in equation 3 is estimated with panel method of econometric analysis. The econometric regression form of the model is presented as follows: Cost per Loan Ratio (CPLR) is the average cost per loan advanced to customer in monetary term known as the credit administration. Purpose of this is to indicate efficiency in disbursement of loans to customers ([4], 1996). Cost per Loan Ratio can be calculated as: 2014, IJRMBS All Rights Reserved 52

4 ISSN : (Online) International Journal of Research in Management & CPLR = Total Operating Cost Total Loans. Sources of Data The data for this study were mainly secondary data covering the period and were obtained from financial statement of ten selected banks in Nigeria. IV. Results and Discussion Descriptive Analysis The descriptive analysis of the variables used in the study is presented in table 1. Table 1 Result of the Descriptive Analysis of Variables PAT NPLR LLPR LTAR CPLR Mean Median Maximum 1.00E Minimum Std. Dev Skewness Kurtosis Jarque-Bera Probability Sum 1.74E Sum Sq. Dev. 6.93E Observations Source: Author s computation (2017) From table 1 a total of 120 observations were used because of the unbalance nature of the data. The mean result indicated that the average NPLR in Nigeria deposit money banks for the last 15years was 11.75% with standard deviation of 15.39%. The minimum value of NPLR was 0.78% while the maximum was 78.73% indicating huge loan default by customers. The LLPR shows the default risks that banks expect to sustain from lending business. From the table, Nigerian banks maintain an average of 6.9% loan loss reserve amount with minimum and maximum values of 0.38 and 64.81% respectively, this shows that Nigerian banks are slightly below the required 8% provision by Basel Accord. Also, the average LTAR of Nigerian banks was 38.95% with minimum and maximum values of 12.59% and 91.13% respectively, suggesting that banks concentrate on lending business which is relatively riskier than other options to use depositors money. The mean of cost per loan ratio was 26.88% with minimum and maximum values of 0.04% and 1331%, this shows huge amount of administrative cost by deposit money banks in Nigeria. From Skewness statistic, it indicated that all the variables were positively skewed, while Kurtosis statistic reviewed that all variables were leptokurtic (fat tailed) in nature. The Jarque-Bera statistic using its probability value showed that all the variables were not normally distributed. Table 3 Presents the Results of Fixed Effects From the result, none of the independent variable is significant at 5% meaning that they cannot influence PAT individually. It was discovered from the result that all the signs were in line with the opinion expectation in the literature and the apriori expectation of the study except LTAR which is expected to be positive. From the result NPLR, LLPR, LTAR and CPLR all have negative signs meaning they are negatively related to Profit after Tax (PAT). A cursory look at the result revealed that beta coefficient of PAT is positive at constant of meaning that when all variables are held constant, there will be a positive variation up to the tune of units in PAT. In addition, the R² is 37.12% (adjusted R squared 29.41%) indicating that credit risk management indicators explained 29% of the variance in profitability of deposit money banks in Nigeria. Also, the p-value of F statistics is , this is significant at 5% which implies that NPLR, LLPR, LATR and CPLR can altogether influence PAT. Therefore, linear relationships exist between the dependent and the independent variables of the model. Table 3 Results of Random and Fixed Effect Dependent Variable: PAT Independent Variables Random Effect Co-efficient t-statistic Prob. Fixed Effect Co-efficient t-statistic Prob. NPLR LLPR LTAR CPLR Constant R Adj. R F.stat D. Wats Source: Author s computation (2017) At 5% level of significance Table 3 Present the Results of Random Effect The random effect is used where some omitted variables may be constant over time but vary between cases, others may be fixed between cases but vary over time. Random effect estimation is conducted due to the inherent problems in the fixed effects such as loss of degree of freedom, possibility of multi-collinearity, inability of the fixed effect model to track the effect of timeinvariant variables etc. Specifically the random effect estimator assumes that the heterogeneity effect is random rather than fixed effect and that the random effect can only be incorporated into the error term rather than in an intercept deviation terms, thereby forming a composite error term, which is assume not to correlate with any of the explanatory variables. From the result, the coefficients of all the independent variables were negatively related to PAT, except LTAR this is in line with the apriori expectation. It is expected that signs of the coefficients of NPLR, LLPR and CPLR be negative while LTAR be positive. From the result beta coefficient of PAT was positive at constant of , this means that when all variables are held constant, there will be a positive variation up to the tune of units in PAT. All Rights Reserved, IJRMBS

5 International Journal of Research in Management & ISSN : (Online) Moreover, the result displayed above, showed that the regression coefficient of NPLR on PAT is and its P-value is meaning that NPLR has a negative and significant impact on performance of banks in Nigeria. The regression coefficient of loan loss provision ratio (LLPR) and cost per loan ratio CPLR on PAT are and meaning that both LLPR and CPLR have negative impacts on performance of banks in Nigeria. Also, the panel OLS result showed that the regression coefficient of LTAR on PAT is which mean that it has a positive impact on performance of banks in Nigeria. The coefficient of multiple determinations R² is 49.88% (adjusted R squared of about 52%) indicating that credit risk management indicators explained about 52% of the variance in profitability of deposit money banks in Nigeria. Also, the p-value of F statistics is , this is significant at 5% which implies that NPLR, LLPR, LATR and CPLR can altogether influence PAT. The Comparative Analysis of Fixed and Random Effect Results showed that the beta coefficients of all the variables were negative in the result of fixed effect test except constant with negative sign while beta coefficient of LTAR and constant were positive in random effect. The result of the fixed effect showed that none of the variables are significant at 5%, whereas NPLR was found significant in the result of random effect. Furthermore, they both have R 2 of less than 60% and positive signs of constant but the result of random effect has higher values than fixed effect. Lastly, the P-values of F-stat. of both are significant at 5%. Table 4 Contained the Result of Hausman Test To determine the appropriate estimator between fixed effect and random effect the Hausman test is used. Hausman Test compares fixed effect with random effect. If the Hausman test is insignificant (Prob > Chi 2 greater than.05), then the fixed effects model will be used and vice versa. Table 4 Result of Hausman Test Correlated Random Effects - Hausman Test Test Summary Chi-Sq. Statistic Chi-Sq. d.f. Prob. Period random Source: Author s computation, (2017) It was shown from the result that the chi-square value is alongside a probability value of The result showed that there is enough evidence to reject the null hypothesis of no substantial difference between fixed effect estimates and random effect estimates. Meaning that there is correlation between the random effect incorporated into the composite error term and the other regressor. From the foregoing, it thus stands that among the two estimators (fixed effect and random effect) used for analysis in this study, random effect estimator presented in table 3 is most efficient and consistent estimator that can track the true nature of the nexus between profitability and non-performing loan, loan loss provision, loan to total asset and cost per loan of Nigerian banks. These findings were in agreement with the findings of [13], [15], [2], [21] and [1]. Conclusion and Recommendations Following the various tests conducted on the effects of credit risk management on the performance of deposit money banks in Nigeria, starting from the result of the descriptive analysis, it was evident that there was huge loan default by customers due to banks poor credit risk management. Also, Nigerian banks were slightly below the required provisions for loan loss, while loan to total asset suggested that banks concentrated more on lending business which is relatively riskier than other options to use depositors money. The cost per loan showed a huge amount of administrative cost expended by deposit money banks in Nigeria. Random Effect test showed that credit risk management indicators can jointly influence the performance of banks. The evidence established that credit risk management indicators have impact on the profitability of banks in Nigeria. NPL is negative and statistically significant at 5 percent significance level. The result however, showed a strong negative relationship between non performing loans and deposit money banks performance. The negative relationship between non performing loans and profitability of banks indicates that, non-performing loans are decreasing proportionately to profitability. Furthermore, the result showed that loan loss provision which is a reserve that enables banks to recognize in their profit and loss statements the expected loss from a particular loan portfolio was negative and not significant to profitability. The insignificant impact of the level of LLPR on deposit money banks profitability seems to confirm with the directive of the Central Bank of Nigeria (CBN) and Basel Accord on adequate provisions for loan loss. In addition, loan to total asset ratio was found to be positive and not significant. Banks with higher loan to total asset ratio have high exposure to credit risk. Its insignificant impact to deposit money banks profitability is due to other sources of revenue to the banks such as bank charges, high interest rate on loans and advances, low interest on deposit and so on. The average cost per loan advanced to customer was found to be negative and insignificant to profitability. Higher administrative cost leads to lower profit. Also, its insignificance implies that high interest charged on loans and advances by Nigerian deposit money banks rendered CPL insignificant to their profits. Finally, it is evidenced that these credit risk management variables are important determinant of deposit money bank profitability in Nigeria. This means that the profit after tax has been responsive to the credit policy of Nigerian banks. The growth of loan has been relatively fast for the past years and which is not fully recovered by the deposit money banks due huge percentage of non-performing loans. From the findings, it is concluded that banks profitability is inversely influenced by nonperforming loans, loan loss provision and cost per loan thereby exposing them to great risk of illiquidity and distress. The level of loan to asset also influence performance of banks positively, therefore, aggressive deposit mobilization will increase credit availability to borrowers. Efficient and effective credit management remains a hidden treasure to quality credit management. Based on these findings, the study recommended that: Nigerian banks should ensure high quality credit management and adherence to professional banking ethics, Deposit money banks in Nigeria should make adequate effort toward deposit mobilization in order to increase profitability and credit availability for the deficit units of the economy, They should equally reduce credit administrative cost so as to be more efficient and enhance profitability, The CBN should regularly assess the lending attitudes of financial institutions and Deposit money banks should put in place effective institutional measures to deal with credit risk management. 2014, IJRMBS All Rights Reserved 54

6 ISSN : (Online) International Journal of Research in Management & References [1] Adeusi, S. O., Akeke, N. I., Adebisi, O. S., & Oladunjoye, O. Risk management and financial performance of banks in Nigeria. European Journal of Business and Management, 6(31), [2] Al-Khouri, R. Assessing the risk and performance of the GCC banking sector. International Journal of Finance and Economics, 65, [3] Allen, F., & Carletti, E. Credit transfer and contagion Journal of Monetary Economics, 53(1), [4] [5]Appa, R. The monetary and financial system (3rd ed.). London Bankers Books Ltd [5] Ara, H., Bakaeva, M., & Sun, J. Credit risk management and profitability in deposit money banks in Sweden. Master thesis. University of Gothenburg, [6] Auronen, L. Asymmetric information: Theory and Applications Paper presented in the Seminar of Strategy and International Business as Helsinki University of Technology.14-18, [7] Bessis, J. Risk Management in Banking, 2nd ed John Wiley & Sons, Chichester, UK. Bank for International Settlements Range of Practice in Banks' Internal Ratings Systems, Basel Committee on Banking Supervision, Document No , [8] Bodie, J., Kane, R., & Marcus, G. Essentials of Investments (5th ed). New York: McGraw-Hill, [9] Chen, K., & Pan, C. An Empirical Study of Credit Risk Efficiency of Banking Industry in Taiwan. Web Journal of Chinese Management Review, 15(1), [10] Duffie, D., & Singleton, K. J., Credit Risk: Pricing, Measurement and Management Oxford: Princeton University Press, [11] Gujarati, D. N. Basic Econometrics, Fourth Edition MacGraw-Hill Companies, [12] Jenkinson, N. Strengthening regimes for controlling liquidity risk Euro Money Conference on Liquidity and Funding Risk Management, Bank of England, London, 9-23, 2008 [13] Kargi, H. S. Credit Risk and the Performance of Nigerian banks Master thesis Ahmadu Bello University, Zaria, [14] Koch, T. W., & Macdonald, S. S. Bank Management [online] Available at: G32Wa3e3gC&printsec=frontcover&source=gbsViewAPI &redir_esc [15] Kolapo, T. F. Ayeni, R. K., & Oke, M. O. Credit risk and deposit money banks performances in Nigeria: a panel model approach. Australian journal of business and management research, 2(2), [16] Lawrence, I. Loan management and the performance of Nigerian Banks: An Empirical Study. International Journal of Management, 2(1), [17] Markowitz, H. Portfolio selection, Journal of Finance, 39, 77-97, [18] Nijskens, R., & Wagner, W. Credit risk activities and systemic risk: how banks became less risky individually but posed greater risks to the financial system at the same time. Journal of Banking & Finance, 35(6), , [19] Richard, F. Bank monitoring and accounting recognition: The case of aging-report requirement Retrieved [20] Saunders, A., & Allen, L. Credit Risk Measurement: New Approaches to Value at Risk and Other Paradigms, Published by John Wiley &Sons, Inc., New York, [21] Taiwo, A. M., & Abayomi, S. T. Credit management spur higher profitability? evidence from Nigerian banking sector Journal of Applied Economics and Business, 1(2) 46-53,2013. [22] Taxxman, G. Credit Risk Management in Banks Vinyay press Delhi. 42, [23] Uwalomwa, U. Uwuigbe, O., & Oyewo, B. Credit Management and Bank Performance of Listed Banks in Nigeria. Journal of Economics and Sustainable Development, 6(2), 27-32, (2015). [24] Yuga, R. B. Effects of Credit Risk on the Performance of Nepalese Deposit money Banks. NRB Economic Review, 42-66, All Rights Reserved, IJRMBS