Credit Risk Management Practices and Performance of Deposit Money Banks in Nigeria

The study examined Credit Risk Management Practices and Performance of Deposit Money Banks in Nigeria. The specific objectives were to: examine the effect of loan appraisal procedures on the loan recovery rate and assess the effect of credit monitoring systems on the loan growth rate of deposit money banks in Nigeria. The area of the study was Enugu State. The study used the descriptive survey design approach. The primary source of data was the administration of questionnaires. A total population of 322 staff was used. 251 staff returned the questionnaires and accurately filled them. Data was presented and analyzed using mean score and standard deviation. The hypotheses were analyzed using the Z-test statistical tool. The findings indicated that loan appraisal procedures had a significant positive effect on the loan recovery rate of deposit money banks in Nigeria, Z(9.168, P = 0.05), and credit monitoring systems had a significant positive effect on the loan growth rate of deposit money banks in Nigeria, Z(9.231, P = 0.05). The study concluded that loan appraisal procedures and credit monitoring systems had a significant positive effect on the loan recovery rate and loan growth rate of deposit money banks in Nigeria. The study recommended, among others, that deposit money banks should strengthen and standardize their loan appraisal procedures by adopting comprehensive borrower evaluation and risk assessment techniques to improve loan recovery rates and minimize default risks.