Assessing the Impact of Bank Monitoring Practices on Loan Performance in Deposit Money Banks in Oyo State, Nigeria

This study examines the impact of bank monitoring practices on loan performance in Deposit Money Banks in Oyo State, Nigeria. The research is motivated by rising concerns over non-performing loans and weak credit administration in the Nigerian banking sector. A descriptive survey research design was adopted, and primary data were collected from 300 respondents drawn from selected banks, including First Bank, UBA, Polaris Bank, Wema Bank, and Zenith Bank Plc. Data were analyzed using descriptive statistics and inferential tools such as Pearson correlation and multiple regression analysis at a 5% level of significance. The regression results revealed that loan appraisal practices significantly influence loan performance, explaining 50.8% of the variation in loan outcomes (R² = 0.508; F = 84.62; p < 0.001). Staff competence emerged as the strongest predictor (β = 0.227), followed by risk assessment and credit history evaluation. Post-disbursement monitoring also showed strong effectiveness, with a grand mean of 3.79, indicating that regular site visits, follow-up communication, and repayment tracking improve borrower discipline and loan recovery. Furthermore, collateral monitoring practices exhibited a significant negative relationship with non-performing loans (r = -0.680, p < 0.01), while loan default rate (r = 0.712) and credit risk exposure (r = 0.694) were positively associated with NPLs. The study concludes that effective monitoring practices significantly enhance loan performance by reducing default risks and improving credit recovery. It recommends strengthened post-loan supervision, adoption of digital monitoring systems, and continuous training of credit officers to improve lending outcomes and financial stability in Deposit Money Banks in Nigeria.