The Effect of Credit Risk Management on the Financial Stability of Banks in the United Kingdom (Published)
Banks around the world are critical to nations economy development due to the significant roles of banks in providing credit to support growth of the economy. In carrying out this task, banks are faced with several risks of which credit risk is significant considering that disbursement of credit is the principal generating source of revenue for banks. Consequently, mitigating credit risk is essential to the continued existence of banks to ensure financial stability of a nation. The study evaluated the effect of credit risk management on financial stability of banks in the United Kingdom. The model used for the research proxied credit risk management as total risk assets to total assets ratio (TRAR), total loans to total deposits ratio (TLTDR), non-performing loan ratio (NPLR) and loan cover ratio (LC). Financial stability was measured by liquidity coverage ratio (LCR), leverage ratio (LR), capital adequacy ratio (CAR) and return on assets before tax (ROABT) and the study collected data from top (5) banks in the United Kingdom. The secondary data required were extracted from the audited financial statements of selected UK banks from 2016 to 2021 and the data was analysed using regression technique through SPSS version 28.The research concluded that there exists significant positive effect between credit risk management and financial stability of sampled UK banks for the sampled period since the result of the regression analysis revealed that the probability of F-statistic value of 3.427 with p-value of 0.023 is below significance level of 5%.The study therefore recommends that credit risk management(CRM) proxied by total risk assets to total assets ratio (TRAR), total loans to total deposits ratio (TLTDR), non-performing loans to gross loan ratio (NPLR) as a measure of asset quality and loan cover ratio (LC) have a joint significant effect on financial stability of UK banks.
Keywords: Credit Risk Management, Credit risk, Non-performing Loan., UK banks, financial stability
Credit Risk and Financial Performance of Deposit Money Banks in Nigeria: Moderating Role of Risk Management Committee (Published)
The global financial crisis of 2008 and the economic dislocation that followed the emergence of COVID 19 adversely affected financial institutions leading to debt crisis in the Nigerian banking sector. Despite the risk management framework within the banking sector, credit still remains a crucial factor in comparison to other driving factors in the bank, due to its attendant risk and the effect on the economy. This study examined the risk management committee’s role on the effect of credit risk on financial performance of 13 deposit money banks in Nigeria from 2012 to 2021. Finance distress theory was adopted for the study. The study adopted census sampling technique. Regression model used to analyze the panel data. The multiple regression result revealed that credit risk has a negative and significant effect on financial performance. The moderating role of risk management committee revealed that credit risk has a positive and significant impact on financial performance of deposit money banks in Nigeria. The study recommends that DMBs in Nigeria should continue improving on their risk management policies to enable good credit facility procedures to borrowers, also the board of directors should actively participate in managing the credit facilities to customers.
Keywords: Credit risk, Deposit Money Banks, Financial Performance, Nigeria, Risk Management
Factors Affecting Credit Risk to Individual Customers at the Joint Stock Commercial Bank for Investment and Development of Vietnam Dong Thap Branch (Published)
Research on factors affecting credit risk for individual customers at Dong Thap BIDV was conducted by interviewing 130 individual customers who were borrowing money at Dong Thap BIDV through prepared questionnaires.The study uses methods such as descriptive statistics, absolute and relative number comparison, probit regression model to solve the research objectives. Research results show that there are 04 independent variables with a linear correlation with the dependent variable, including debt guarantee; The main industry generates income to pay off debt; Experience of credit officers; Number of dependents. From the research results, the authors propose a number of solutions to limit the credit risks of individual customers at Dong Thap BIDV in the next time.
Keywords: BIDV Dong Thap, Credit risk, Factor analysis, individual customers
Credit Risk and Financial performance: An empirical study of deposit money banks in Nigeria (Published)
Money deposit banks’ ability to mitigate credit risks has been a contemporary and controversial debate in literature, in contributing and extending the frontiers, this study examined the effect of credit risk on financial performance of money deposit banks in Nigeria. The study adopted an expo facto research design, descriptive and using inferential statistics to analyse the data. The population consisted of all the 19 money deposits banks (MDB) listed on the Nigeria stock exchange as at 31st December, 2018. A sample of 13 MDB were chosen on purpose, based mainly on availability of complete data within the study period under consideration. The study covered 169 firm-year observations for the period of 2006-2018. The study extracted secondary data from the financial statements of the banks explored for the study. The study identified three variables of financial performance (dependent variable) surrogated with return on capital employed (ROCE), the independent variable of credit risk proxied with non-performing loans, capital adequacy ratio, loan loss provisions loan to deposit ratio and the control variables of bank Size. The study found that credit management had a positive significant effect on financial performance of the MDB.(Ad R2=0.028,F(4,4170) =2.26;P-value <0.05)When the control variable of bank size (BSZ), stronger effect was exhibited, the study found that credit risk with bank size had a stronger significant effect on financial performance of MDB in Nigeria(Ad.R2=0.4311,F(4,4170)=321.95;p-value<0.05). The study concluded that credit management influences the financial performance of Deposit Money Banks in Nigeria. The study recommended that management of the MBD should design and maintain a robust credit management strategy and framework as well as stringent credit policy that would decrease non-performing loan and default level; and improve their performance level in Nigeria.
Keywords: Credit risk, Financial Performance, capital employed, dividend, money deposit banks, nonperforming loans
The Determinant of Bank Credit Risk: Comparative Analysis of Conventional and Islamic Banks in Indonesia (Published)
Credit/financing is bank’s core business following with credit/financing risk. Increasing and decreasing of credit/financing risk affected by external factor such as macroeconomic variables also internal banking factor. The aim of this research is to analyse which macro (GDP, exchange rate, consumer price index, Bank Indonesia Certificates/Sharia & money supply) and micro (loan/financing to deposit ratio, capital adequacy ratio, operational efficiency ratio) variables the most affecting to credit/financing growth and credit/financing risk. This research utilized Vector Error Correction Model (VECM). The result of this research showed Bank Indonesia Certificates and money supply as macro variables have the most influence, and CAR as internal factor has the biggest contribute to credit growth. For financing growth, macro variables that have biggest influence are exchange rate and Bank Indonesia Certificates Sharia, as for micro variable CAR has the biggest contribution. Credit risk affected by Bank Indonesia Certificates, and for micro variable, LDR has the biggest influence. For financing risk, Bank Indonesia Certificates Sharia has the biggest influence, and OER has the biggest contribution.
Keywords: Credit Growth, Credit risk, Financing Growth, Financing Risk, VECM