Impact of Credit Risk Management on Financial Performance: A Study of Selected Commercial Banks in Ghana

Abstract

The introduction of Basel II has increased the importance of credit risk management. Financial crisis is also a reason for this. Credit grant is a major source of earning for banks and financial institution. How credit risk management has made effect on financial performance or profitability for some selected commercial banks in Ghana is the main objective. The time period is of seven years (2011-2017). Two model specifications have been adopted to assess this relationship. The dependent variables are: two major measures of profitability (ROE and ROA). The credit risk measures adopted in the study included capital adequacy ratio, non-performing loans to total loans, loan loss provisions ratio and loans to deposit ratio.