Credit Risk Management Techniques

Commercial banks engage primarily in the business of financial intermediation which involves mobilizing funds from surplus units of the economy and channeling same to the deficit units by way of lending. In the course of lending activities the banks are exposed to credit risk that is risk of loan default which constitutes the greatest risk to most banks and often lead to massive decline in business margin liquidity squeeze capital erosion management crisis bank failure and macroeconomic distress. In this book defective credit risk management techniques have been identified as major problems militating against loan portfolio quality of Nigerian commercial banks. The study concluded that credit risk management techniques constitute critical determinants of loan portfolio quality of commercial banks. Supervisory and regulatory authorities must always up their ante to enable them engender dynamic policy initiatives that will drive optimum aggregate loan portfolio quality and macroeconomic stability.