Impact of Credit Risk Exposure on the Market Value of Nigerian Banks (2006–2012)
Adebawo, Olutokunbo Owolabi, Enyi, Patrick Enyi

This study examined the impact of credit risk exposure on the market value of Nigerian Banks from 2006 to 2012 based on the suspicion that the collapse of the banking system as witnessed in Nigeria in 2008 was the result of improper risk assessment. Purposefully built credit risk exposure model was used to predict the impact of credit risk exposure on the performance of the 18 banks listed on the Nigerian Stock Exchange as at December 31, 2012 including the 3 nationalised banks together with secondary data which were tested statistically. The findings revealed that banks’ credit risk exposure did not have a strong influence on their market value and performance at F = .793 with P value of .513 significance. Conclusively, banks’ risk analysis is an indispensable aspect of credit assessment and the credit risk exposure model developed for the study was found to be effective in predicting credit risk exposure for all the banks. The study recommended that banks’ management should comply fully with statutory provisions.

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