EFFECT OF CREDIT RISK MANAGEMENT ON THE LENDING OPERATIONS OF BANKS

ABSTRACT Credit risk is defined as the potential that a bank's borrower or counterparty will fail to meet its obligations in accordance with agreed terms. It also refers to a risk that a borrower will default on any type of debt by failing to make required payments, through credit risk management it helps in managing the probability of a company's losses for its borrowers default in payment. This study was however conducted to examine: The effect of credit risk management on the lending operations of banks. Relevant literatures were effectively reviewed and the basic concept of credit risk and credit risk management were exhaustively discussed the TARO YEMENS Statistical formular was used in the determination of sample size, while the x2 mathematical formula was adopted as the basis for data analysis. The main objective of the study was to examine; the effect of credit risk management on the lending operations of banks with reference to First bank plc Aba. Finding from the study however show that, credit risk management have significantly effect on the lending operations of banks. It was however recommended among others that; the management of financial institutions should have a proper system for monitoring the condition of individual credits, including determining the adequacy of provisions and reserves by employing an information systems and analytical techniques that enables management to measure the credit risk inherent in all on-and-off balance sheet.