Review of theoretical literature: The relationship between credit risk management and bank profitability

Abstract

Today, commercial banks are the largest financial institutions in our country. Credit risk is one of the biggest risks of these banks due to the nature of their activities. Through effective credit risk management, banks not only support the sustainability and profitability of their business, but also contribute to systemic stability and an efficient distribution of capital in the economy. This paper will focus on the theoretical analysis of the relationship between some indicators of credit risk management and indicators of bank profitability, as well as the evidence of the stability over time of this relationship.