Influence of Credit Risk Management on Loan Performance: Special Reference from Commercial Banks of Ampara District in Sri Lanka
Abstract
Credit risk management is an emerging activity that lies within financial institutions. This study focused on credit risk management and its impact on loan performance in commercial banks of Ampara district in Sri Lanka. The target population in this study was managers and credit officers in commercial banks in region. Census study design was used because all branch managers and credit officers were directly targeted in this study. Data were collected in 2015 using questionnaires and analyses were done using correlation analysis and multiple regression techniques. The findings revealed that loan appraisal, financial viability, technical feasibility, credit rating, risk transfer, risk diversification and risk retention has no significant relationship with loan performance. Thus this study concluded that impacts of credit risk management significantly not influenced on loan performance of Commercial Banks in Ampara District. Therefore, it can be recommended that adoption of a more stringent policy on credit risk management in commercial banks so as to improve their loan performance.
Keywords: Credit Risk Management, Loan Performance, Commercial Banks, Diversification.
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