Abstract:

In this paper, secondary data was obtained in form of annual time series characteristics from 2007 to 2019 to study the influence of credit risk on bank lending in Nigeria. A model was developed and examined using descriptive statistics and the Ordinary Least Square (OLS) statistical approach in order to meet the study's objectives. The dependent variable in the model was bank lending, whereas the independent variable was credit risk. The study’s data were extracted from the World Bank which utilized in the research. Findings from the results indicates a positive effect of credit risk on bank lending in Nigeria. However, the relationship between credit risk and bank lending is statistically significant. The study recommends therefore that individual and business organizations should be mindful of the amount of loans they are borrowing thereby making sure that the amount of loan they are getting is calculated such that they are able to fulfill the loan conditions eventually. Also, the banks should be cautious of the loans they lend out, making profit should not just be their main goal of lending money. The 5 C’s of lending namely; Character, Capacity, Capital, Collateral and Conditions are very important and they must be fully considered when lending out loans. Since, credit risk is found to be high, banks should reduce the portfolio of nonperforming loans. This way, both parties (banks and customers’ benefits) when these basic principles are followed.