Challenges on Loan Recovery and Performance of Money Deposit Banks in Nigeria

Abstract

The quality of loan recovery in Nigerian deposit money banks is presently impaired with the incidence of a large portfolio of non-performing loans. The position of the banks to also act as prime movers of economic development and to effectively manage their credit risk, has not been effective; the study therefore examined the potency of credit risk management in addressing loan delinquency or high non-performing loan of deposit money banks in Nigeria. In view of this, investigation was conducted on the effect of credit risk architecture on loan recovery. Primary data was used for the study, 5 banks were selected at random with a sample size of 105 and the ordinary least square was used for data analysis and it was concluded that effective credit risk architecture could enhance loan recovery of deposit money banks in Nigeria. The research recommends that deposit money Banks should enhance their credit risk architecture to always include collateral review and management, facility performance monitoring, quality reviews, classification and risk portfolio reporting.