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An analysis on bank lending practices and credit risk management in the economic development of Nigeria was carried out in this study. It is evident that credit risk has a negative impact on bank efficiency and distort profitability with a resultant loss in banks’ earnings. This can affect the rate at which the banks mobilize funds and will in turn affect economic growth and development in Nigeria. This study seeks to examine the effect of credit risk if not properly managed on the development of Nigeria’s economy. The CBN Statistical Bulletin was used to gather secondary data for an empirical analysis. Banks should also stick to the credit risk management guidelines as stated in the prudential guideline of the Central bank of Nigeria. The data were analyzed using a multiple linear regression model for this research work. The findings of this research work were that there is a significant increase in predictor variables such as interest rate spread, actual liquidity ratio, loan to deposit ratio, non-performing loan, and money supply will cause a corresponding unit to increase in economic development of Nigeria. This study was based on the endogenous growth theory. The resultant effect of this is that, there will be a decline in economic development as a result of an increase in these variables. This means that bank lending activities have a significant impact on the economy of Nigeria. Therefore, bank performance is determined by its ability to manage its credit risk and generate sustainable profit. |
