Title: Credit risk and bank performance: a Sub-Saharan African perspective

Authors: Adamu Yahaya; Fauziah Mahat; Aliyu Mamman

Addresses: Department of Business Management, Federal University Dutsin-Ma, P.M.B 5001, Dutsin-Ma, Katsina State, Nigeria; School of Business and Economics, Universiti Putra Malaysia, P.M.B 43400, Serdang, Malaysia ' School of Business and Economics, Universiti Putra Malaysia, P.M.B 43400, Serdang, Malaysia ' Department of Business Management, Federal University Dutsin-Ma, P.M.B 5001, Dutsin-Ma, State, Nigeria

Abstract: Credit risk is one of the dominant risks that pose a great threat to the performance of banks. This study examines the effect of credit risk on the performance of banks in Sub-Saharan Africa (SSA). A total sample of 50 banks was drawn from six Sub-Saharan African countries which include Nigeria, Ghana, South Africa, Zambia, Kenya, and Tanzania from 2010-2018. A two-step system GMM is applied and the findings reveal a significant negative relationship between credit risk and bank performance in the SSA region. The risk committee has a significant positive impact on the performance of banks in the SSA region. Bank management is encouraged to embrace a modern and efficient credit risk management technique to have better control of the rate of credit risk experienced in banks.

Keywords: credit risk; return on asset; earning per share; two-step system GMM; Sub-Saharan Africa; SSA.

DOI: 10.1504/AAJFA.2024.137359

Afro-Asian Journal of Finance and Accounting, 2024 Vol.14 No.2, pp.170 - 191

Accepted: 18 Jan 2022
Published online: 14 Mar 2024 *

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