The Role of Credit Risk Management in Performance of Commercial Banks: Analysis of Commercial banks’ Performance in Erbil

Abstract
The current study aims to analyze the role of credit risk management in performance of commercial banks in Erbil.\r\n\r\nThere is a high danger of insolvency and financial troubles for banks because of this method of loan origination. As shown by high levels of nonperforming loans, the KRG banking system\'s Commercial Bank Supervision Report found that most banks failed due to poor credit risk management. Due to the high level of non-performing loans, the profitability of the bank was damaged. The study developed five research hypotheses to measure the role of credit risk management in performance of commercial banks in Erbil. It was decided to use a quantitative approach to investigate the effect credit risk management has on the financial performance of commercial banks. 88 people from the Credit Risk Management departments of several commercial banks around the nation were selected as a convenience sample. These respondents included senior, intermediate, and practical level personnel. The study found that commercial banks with lower levels of nonperforming loans and capital adequacy ratios had higher returns on assets, indicating more effective methods of credit risk management. Total loans divided by the loan loss reserve ratio is the amount set aside for losses. The quality of a loan portfolio degrades as the ratio rises. The study recommended to improve credit risk identification, measurement, monitoring and controlling at selected commercial banks in Erbil.

Author
Bayar Jaafar Kareem

DOI
https://doi.org/10.25212/lfu.qzj.8.2.46

Publisher
QALAAI ZANIST JOURNAL

ISSN
2518-6558

Publish Date: