Research Article
Osakwe, Ananwude and Nduka
Abstract
Credit risk management and efficiency of the banking industry remains a debated issue in literature. Our position on this subject matter is that credit risk affects banks’ efficiency and distorts profitability with a resultant loss in banks’ earnings. Momentous depreciation in banks ’ earnings would make shareholders not to have confidence in banking operations. This would affect banks’ capacity to mobilize idle funds from the public which influences effective financial intermediation. A bank may go bankrupt and possibly into merger with another bank or have its licence revoke by regulatory authority (ies) owing to ineffective credit risk management practice. The finding from this study using data from 1999 to 2018 sourced from the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) revealed that credit risk management has significant effect on efficiency of the Nigeria banking industry. We suggest that banks should adhere strictly to the rules that guide given of loans and advances to customers. In addition, banks should abide by the credit risk management guidelines as spelt out in the prudential guideline of the Central Bank of Nigeria.