CREDIT RISK AND BANK PROFITABILITY NEXUS: EVIDENCE FROM TOO BIG TO FAIL BANKS IN NIGERIA

This research aims to assess the effect of credit risk management measures on the profitability of selected commercial banks in Nigeria through the lens of the Domestic Systemically Important Banks in Nigeria from 2010-2019. The transformed random effects-generalized least squares regression results showed that an increase in the loan loss provisions wields an adverse effect on the profitability of the selected Domestic Systemically Important Banks in Nigeria, evidenced by its significance at 5%. However, the ratio of non-performing loans to total loans and advances was declared insignificant at 1% and 5%, thereby concluding that non-performing loans negate the profitability of Domestic Systemically Important Banks in Nigeria, reaffirming the position established by previous country-based studies. Capital Adequacv Ratio was declared significant at 1% and 5% leading to the conclusion that sufficient bank capital increases the profitability of selected D-SIBs in Nigeria. This study proposes a shift in attention to loan loss provisions and its importance, as displayed in this study. Policy recommendations are proffered herein.