Credit Management and Financial Performance of Listed Deposit Money Banks in Nigeria
Year: 2026
Type: article
Abstract: This study examined the effect of credit management on the financial performance of listed DepositMoney Banks (DMBs) in Nigeria, and it was motivated by the persistent challenges of credit risk, nonperforming loans, and declining profitability within the banking sector. The study investigates how creditmanagement practices contribute to financial performance among listed Deposit Money Banks.Specifically, it evaluates the effect of Accounts Receivable Turnover (ART), Current Ratio (CR), andAverage Collection Period (ACP) on Return on Assets (ROA) of listed Deposit Money Banks in Nigeria.The study adopts an ex post facto research design and a panel data framework covering ten (10) listedDeposit Money Banks over a ten-year period (2015–2024). Data were obtained from audited annualfinancial statements and the Nigerian Exchange Group (NGX) database. Panel regression techniqueswere employed, and the Hausman specification test was used to select the appropriate model. Findingsfrom the analysis revealed that ART has a positive and significant effect on ROA, CR has a positive andsignificant effect on ROA while ACP has a negative and significant effect on ROA. The model furthershowed strong explanatory power with R² = 0.62, indicating that credit management variables explain asubstantial proportion of variations in financial performance. The study concludes that effective creditmanagement significantly enhances the financial performance of listed deposit money banks in Nigeria. Itrecommended that monitoring systems, improving loan recovery mechanisms, and maintaining soundliquidity management practices to enhance profitability, asset quality, and long-term sustainability withinthe banking sector.
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7220559693