ELAWURE DANIEL

The relevant goal of this study was to empirically examine the relationship betweencredit risk management and financial performance of deposit money banks in Nigeriafor a period of 9 years (2009 to 2017). The rationale for the study was basedontherealization that credit risk is one of the most sensitive exposures facing the financial performance of any deposit money banks in the world today. Failure to ef ectivelymitigate its adverse ef ect, will spell doom for the banks. Descriptive statistics andcorrelation coef icient were used to examine the background characteristics of thevariables. The panel data analysis econometric technique was employed for the mainanalysis of the study. The findings from the empirical analysis, on the basis of the fixed ef ect indicatethat nonperforming loans and bank size have significant negative impact on the banks’ financial performance in Nigeria. While capital adequacy, loan loss provisionandliquidity ratio does not have significant impact on banks ’financial performanceinNigeria. The study recommends among others that; management needs to be cautious insetting up a credit policy that can be strongly linked with profitability in the banks. Management also needs to know how credit policy af ects the operation of theirbanks to ensure judicious utilization of deposits and maximization of profit. Impropercredit risk management reduces the bank profitability, af ects the quality of its assetsand increase loan losses and non-performing loans which may eventually leadtofinancial distress. Also, management should not solely concentrate on the profit maximization concept but should also adopt measures that will ensure ef ectiveliquidity management. These measures will help to minimize or avoid cases of excessive variation in banks ’ liquidity position..