Abstract
This study examined the effect of credit risk management on sub-standard loan portfolio of quoted commercial banks in Nigeria. Cross sectional data was sourced from financial statement of commercial banks and Central Bank of Nigeria Statistical bulletin from 2009-2018. Sub-standard portfolio was used as dependent variable while bank risk diversification, Basel risk compliance, risk transfer were used as independent variables. Panel data methodology was employed while the fixed effects model was used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. Panel unit roots and panel cointegration analysis were conducted on the study. The empirical results proved that 41.7 per cent variations in the sub-sub-standard loans’ portfolio was explained by credit risk management. From the random effect results, bank risk transfer and Basel compliance have positive relationship with sub-standard loan portfolio while risk bank risk diversification have negative relationship with sub-stand ad loan portfolio of the commercial banks. We recommend that management of the commercial banks should be pro-active and devise effective measures of managing credit risk to reduce the incidence of sub-standard loans. The monetary authority should monitor the Basel compliance rate and policies of the commercial banks to credit risk management
Highlights
This study aims to determine the effect of liquidity and leverage on profitability in the food and beverage sub-sector companies of the Indonesia Stock Exchange
The formulation of the problem in this study is whether there is an effect of liquidity and leverage on profitability in the food and beverage sub-sector companies on the Indonesia Stock Exchange
The population in this study are food and beverage companies listed on the Indonesia Stock Exchange for the period 2015-2019
Summary
Industri makanan dan minuman di Indonesia memiliki peran penting dalam pertumbuhan ekonomi di Indonesia. Hal ini sejalan dengan pendapat Irham Fahmi (2014:81) bahwa Profitabilitas merupakan rasio untuk menilai kemampuan perusahaan dalam mencari keuntungan atau laba dalam suatu periode tertentu. Pemilihan current ratio karena rasio ini dapat mengukur kemampuan perusahaan dalam memenuhi utang jangka pendeknya dengan menggunakan aktiva lancarnya. Alasan pemilihan DAR sebagai indikator adalah karena rasio ini menggunakan aktiva sebagai pembanding dari hutang perusahaan yang mungkin memiliki resiko dan akan berpengaruh terhadap laba perusahaan. Berdasarkan pengelolahan rata-rata tingkat likuiditas, leverage dan profitabilitas pada perusahaan Subsektor Makanan dan Minuman yang terdaftar di Bursa Efek Indonesia (BEI) periode 2015-2019 dapat dilihat pada grafik dibawah ini: Gambar 1. Hal ini menunjukkan bahwa kemampuan membayar kewajiban atau hutang yang harus dipenuhi dengan aktiva lancar lebih rendah pada tahun 2015 dibanding tahun 2018 yang lebih tinggi. Penelitian yang dilakukan Debby Ayu Puspita (2018) menunjukkan bahwa leverage tidak berpengaruh terhadap profitabilitas, namun Likuiditas berpengaruh positif terhadap profitabilitas
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