IMPACT OF CREDIT RISK ON BANK PERFORMANCE IN NIGERIA

The study considered the effect of credit risk on bank performance in Nigeria, taking into cognizance three banks selected at random in Nigeria. The study used return on assets as the dependent variable and also used capital adequacy ratio, non-performing loans ratio, total loans to total assets, total deposit and interest rate as independent variables coupled with the use of the classical Ordinary Least Square and panel cointegration techniques revealing that credit risk has negative impact on bank performance in the short run and while credit risk also has a long run relationship with bank performance in the long run. Hence, it was recommended that regulatory framework should be adhered to, internal control system should be enhanced while macroeconomic policy makers should stabilize the economy in a bid to stabilize profitability of banks.