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 Management and Financial Stability in Quoted Deposit Money Banks in Nigeria (Published)

In the history of development of the Nigerian banking industry, it is evident that most of the failures experienced within the industry prior to the consolidation era were as a result of financial dampening that finally led to bad loans and some other unethical factors and financial stability has generated the ever-increasing attention and interest in academic and banking sector in Nigeria. This study examined the effect of credit risk management on financial stability of deposit money banks in Nigeria; specifically assessing the relationship between credit risk management and financial stability and establishing the level of credit risk measures to be put in place to ensure financial stability of deposit money banks in Nigeria. The study adopted ex-post facto research design. The target population comprised of 22 deposit money banks in Nigeria licensed by the Central Bank of Nigeria as at November 30th, 2018 from which 10 deposit money banks were purposively selected. Data were sourced from the audited and published financial statements of the selected deposit money banks. The data were validated by the statutory auditors. Descriptive and inferential statistics (multiple regression) were used to analyze the result. The findings revealed that asset quality represented by non-performing loan to gross loan ratio (NLPR), Total risk Asset to total asset ratio (TRAR), Loan Loss Provision to total loan ratio (LLPR) and Total Loan to total deposit ratio (TLDR), all had a significant effect on the variables of Financial Stability which are; Debt-to-Shareholders Fund F (99)=11.17, Adj. R2= 0.2419, p < 0.10, Capital Adequacy Ratio F(99) = 20.77, Adj. R2= 0.0490, p < 0.10, Fixed Deposit Cover F(99) = 8.95, Adj. R2= 0.165, p < 0.10 and had joint insignificant effect on Liquidity Ratio F(99)=1.31, Adj. R2= 0.486, p> 0.10 of deposit money banks in Nigeria. The study concluded that credit risk management influenced financial stability of quoted deposit money banks in Nigeria. The study recommended that operators of banks, should pay more attention to those variables of credit risk management in order to improve financial stability by managing credit risk that deposit money banks are facing to improve financial stability and to put in place proper credit management policy to mitigate credit risk and to also improve the knowledge of credit management policy in financial institutions.

Keywords: Credit Risk Management, Deposit Money Banks, Non-Performing Loans, credit management policy, financial stability

Credit Risk Management System of Commercial Banks: An Analysis of the Process (Published)

Credit risk is the risk that a financial institution will incur losses because the financial position of a borrower has deteriorated to the point that the value of an asset (including off-balance-sheet assets) is reduced or extinguished. The purpose of this work is to expatiate strategies to mitigate challenges resulting from unpaid loans, which could be used further in understanding the components of credit risk management (CRM) system of commercial banks (CBs) in a less developed economy. This was accomplished through the use of both primary (interviews) and secondary (various relevant documents) information from CBs and key management officials dealing with credit management. The investigation proved that credit risk can be managed and minimized when formidable strategic approaches are implemented and adhered to. This implies that the strategy operated by a bank is an important consideration for a CRM system to be successful. Ghana, a less developed economy, provides an excellent case for studying how CBs operating in economies with less developed financial sector manage their credit risk. 

Keywords: Borrower, Commercial Banks, Credit Risk Management, Loan