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ABSTRACT
The study empirically examined relationship between credit risk and deposit money banks performance in Nigeria for the period 2013 to 2021, with specific focus on 12 listed deposit money banks. The specific objectives of the study were to find out whether capital adequacy ratio (CADR), non-performing loans ratio (NPLR), Loan to deposit ratio (LTDR), loan loss provisions ratio (LLPR) and bank size (SIZE) significantly impact deposit money banks’ performance. Hence, the panel data analysis was employed for the analysis of data and the results showed that capital adequacy ratio (CADR), bank size (SIZE) and Loan to deposit ratio (LTDR) have significant negative impact on deposit money banks’ performance in Nigeria; non-performing loans ratio (NPLR) has an insignificant negative impact on performance; loan loss provisions ratio (LLPR) failed the 5 percent significance level. The study recommends among others that, since capital adequacy ratio has proven to be a relevant factor in the determination of deposit money banks’ performance in Nigeria, and in order to prevent cases of liquidity crunch in Nigerian banks, the Central Bank of Nigeria (CBN) should ensure strict compliance to the recommended threshold of 15% minimum capital base for banks in Nigeria.
