THE ASSESSMENT OF CREDIT RISK MANAGEMENT IN

NIGERIAN BANKS

BY

ARAGBA OMOEFE BRIGHT

MATRIC NO: 21010331170

BEING A PROJECT SUBMITTED TO THE DEPARTMENT OF

ACCOUNTANCY, SCHOOL OF FINANCIAL STUDIES,

GATEWAY (ICT) POLYTECHNIC, SAAPADE, OGUN STATE.

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE

AWARD OF HIGHER NATIONAL DIPLOMA (HND) IN
ACCOUNTANCY.

AUGUST 2023

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 CERTIFICATION
This is to certify that this research project titled “the assessment of credit risk management in
Nigerian banks” was carried out and submitted by: ARAGBA OMOEFE BRIGHT with
matric no: 21010331170 to the school of Financial Studies, Department of Accountancy,
Gateway (ICT) Polytechnic Saapade.

_________________________ ________________________
Dr. Salami SIGNATURE AND DATE
(Project Supervisor)

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 DEDICATION
This is dedicated to the merciful God who gave me the strength to accomplish this project, He is
the source of my inspiration and reason for my ability, and also to my wonderful mom and
siblings for their consistent supports.

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 ACKNOWLEDGEMENT
My profound gratitude goes to Almighty God for His mercies and protection over me in the

course of my study.

My sincere appreciation goes to my dearest, caring loving family; my mom and my siblings

for their constant support and care during this program.

I will not but appreciate my supervisor in person of Dr. G.O. Salami for his fatherly and

relentless supports towards the completion this project, may God reward you abundantly.

Also, to all the lecturers in the department; Dr. G.O. Salami, Mr. J.O. Orobiyi, Mrs. M.O

Tobin-Spiff, Mrs. A.F Idowu, Mrs. O.F. Ojoye, Mr. B. Bello, Mr. F.O. Ogunbanjo, Mrs. C.J.

Clement, I say a big thank you to you all, God bless you all.

And finally, to my friends and course-mates that supported me during the course of this

project, God bless you all.

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 ABSTRACT

Credit Risk Management (CRM) policies of a commercial bank comprise those decision-

making structures associated with the reduction of exposures to credit asset classification

and loan loss provisioning. The objectives of this study is to determine the relationship

between credit risk management and Nigeria banks, and also to examine the effect of credit

risk management on Nigeria banks. The quantitative research method was employed in this

study and the population of this study was selected from the staffs of selected banks of

Nigeria. The sample selected for this research was 50 employees from the selected banks of

Nigeria. Moreover, the data gathered was on the base of random sampling techniques, the

staffs were randomly selected, the data used for the research were obtained from primary

sources. The data from the primary source were gathered through a questionnaire and

personal interview. For the method of analysis, hypothesis raised was tested using simple

correlation method. Having examined in details the assessment of credit risk management in

Nigeria firm and how important it is to banks, using some banks in Nigeria as a case study

on could rightly conclude that commercial banks with higher capital adequacy ratio can

better advance more loans and absorb credit losses whenever they crop up and therefore

record better profitability

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 TABLE OF CONTENTS

Title Page i

Certification ii

Dedication iii

Acknowledgements iv

Table Of Contents vi - viii

CHAPTER ONE 1

INTRODUCTION 1

1.1 BACKGROUND OF THE STUDY 1

1.2 STATEMENT OF THE PROBLEM 3

1.3 OBJECTIVES OF THE STUDY 4

1.4 RESEARCH QUESTION 4

1.5 RESEARCH HYPOTHESIS 4

1.6 SIGNIFICANCE OF STUDY 5

1.7 SCOPE OF STUDY 6

1.8 DEFINITION OF TERMS 6

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CHAPTER TWO 8

LITERATURE REVIEW 8

2.1 CONCEPTUAL REVIEW 8

2.1.1 CONCEPT OF RISK 8

2.1.2 CREDIT RISK 9

2.1.3 CREDIT RISK MANAGEMENT (CRM) 13

2.1.4 RISK MANAGEMENT IN NIGERIA FINANCIAL INSTITUITIONS 16

2.1.5 CREDIT POLICY 18

2.1.6 LIQUIDITY MANAGEMENT 21

2.2 THEORETICAL REVIEW 22

2.2.1 Transaction Cost Theory 22

2.2.2 Portfolio Theory 23

2.2.3 Information Theory 24

2.3 EMPIRICAL REVIEW 26

CHAPTER THREE 29

RESEARCH METHODOLOGY 29

3.1 RESEARCH DESIGN 29

3.2 POPULATION OF THE STUDY 29

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3.3 SAMPLING TECHNIQUES AND SAMPLING SIZE 29

3.4 SOURCES OF DATA 30

3.5 PROCEDURE USED FOR DATA COLLECTION 30

3.6 METHODS OF DATA ANALYSIS 30

CHAPTER FOUR 31

DATA ANALYSIS, PRESENTATION AND INTERPRETATION 31

4.1 INTRODUCTION 31

4.2 DATA ANALYSIS 31

4.3 ANALYSIS OF RESEARCH RELATED QUESTIONS 34

4.4 TESTING OF HYPOTHESIS 39

4.5 DISCUSSION OF FINDINGS 43

CHAPTER FIVE 45

SUMMARY, CONCLUSION AND RECOMMENDATIONS 45

5.1 SUMMARY 46

5.2 CONCLUSION 46

5.3 RECOMMENDATIONS 46

REFERENCES 48

APPENDIX 52
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