The Impact of Credit Policy on the Performance of Nigerian Commercial Banks

Abstract

The major financial intermediary in any economy is the bank. As financial intermediaries, banks provide means by which funds can be transferred from the surplus unit of the economy to the deficit unit. This role is performed primarily through the acceptance of deposits of different categories and characteristics for onward lending to the numerous customers by way of loans and credits. The study tries to access the impact of credit policy on the performance of Nigerian Commercial Banks using Zenith Bank Plc as case study. Primary data were collected through questionnaires served on sixty (60) respondents (staff: 32 and customer: 28) of the bank. The questionnaires were analysed with the use of chi-square (X²). The findings from the study show that having a good credit policy in place goes a long way in minimizing the incidence of bad debts. It was also discovered that prudent credit assessment and disbursement, dynamic credit monitoring and decisive actions when there are warning signals, have all helped the bank to maintain a high quality of assets and a high level of profitability.