Asessing the impact of credit risk management on the performance of selected commercial banks in Ashanti Region- (Kumasi Metropolis)

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Banks play a crucial role in the economy by connecting lenders to borrowers. The banks as well as other firms are exposed to several kinds of risk but seek ways to manage their risks while striving to maximize performance for this value to be created. This performance is as a result of the banks issuing credits to customers from money deposited by shareholders or savings from customers thus engaging them at risk in case of default. This project is geared towards assessing how selected commercial banks in Kumasi undertake their credit risk management activities with regards to non-performing loans ratio of the banking system, the requirements the Banks consider about companies and individuals before granting them credits, and how the results of credit granted affects the banks performance positively or negatively. This study was carried out using a quantitative research method, and a survey instrument of Questionnaires, were administered on a sample size of 60, out of a sample frame of 103 comprising branch managers, loan managers, loan officers and loan recovery officers, from a target population of about 720 which comprises all the workers of the four selected commercial banks in Ashanti region. The total population of the study is about10,000 representing the population of entire workers of all commercial banks in Kumasi. Stepwise multiple regression and SPSS were used in analyzing the data. The analysis of the empirical data showed that a credit risk exposure occupies an indispensable source of risk that can have adverse impact on the banks performance. It also goes ahead to show that the relationship between credit risk management policy and performance of the commercial banks was very strong. In order for greater results of credit risk management to be attained, banks must critically assess all information about the customer perfectly before granting them loans, and channel resources to application of credit monitoring tools to ensure that credit risk management technology are being fully utilized, to positively influence Banks’ performance.
A thesis submitted to The Board of Graduate Studies, Kwame Nkrumah University of Science and Technology, School of Business, in partial fulfillment of the requirement for the award of Master of Business Administration (MBA Strategic MGT & Consulting)