– Credit Administration And Sub-Standard Loans Of Commercial Banks In Nigeria

NWOSI, Anele Andrew

Department of Banking and Finance, School of Financial Studies,

Captain Elechi Amadi Polytechnic, Rumuola, Port Harcourt, Nigeria



AKANI, Elfreda Nwakaego

Department of Banking and Finance, Faculty of Management Sciences,

Rivers State University, Port Harcourt, Nigeria



This study examined the effect of credit administration on the value of sub-standard loans of quoted commercial banks in Nigeria. Cross sectional data were sourced from financial statement of commercial banks and Central Bank of Nigeria Statistical bulletin from 2009-2018. Sub-standard loan portfolio was used as dependent variables while bank credit monitoring; credit appraisal and internal lending policies were used as independent variables. Panel data methodology was employed while the fixed effects model was used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. Panel unit roots and panel cointegration analysis were conducted on the study. The study found that internal lending policies and credit appraisal have negative relationship with substandard loans portfolio while credit appraisal has positive relationship with substandard loans portfolio. The study found that 40.6 per cent variations in the substandard loans can be accounted for by the independent variables. From the findings, the study concludes that credit administration has significant relationship with loan portfolio of Nigeria commercial banks. The study recommends that there should be compliance from all Central Bank of Nigerian lending guidelines to avert the incidence of non-performing loans in Nigerian commercial banks. The management of commercial bank should formulate credit policies that will reduce the incidence of sub-standard loans among commercial banks in Nigeria.

Keywords: Credit Administration, Sub-Standard Loans, Commercial Banks, Credit Monitoring, Internal Lending Policy.

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