The Impact Of Credit Risk Management On Commercial Panks Performance In Democratic Republic Of The Congo. Case Of BCDC,ECOBANK,RAWBANK And TMB

Credit risk is a major concern for banks,bond issuers and investors.It may be due to an economic recession,thus putting the borrowers in the impossibility of meeting their commitments,but it is all the more crucial for the banker to find effective ways to protect themselves,if not to master this risk of Non-reimbursement of the customer,synonymous with loss or profit.It is utopian for a company to have the goal of losing profit.Like all companies,the bank is a commercial company,which also seeks to maximize its profitability.It therefore has to be profitable in its business.Credit is an anticipation of future revenue,so its good management is crucial to the performance and sustainability of the bank.The performance of a bank implies a good management of credit risks by effective techniques implemented.One of the biggest activities of commercial banks in the Democratic Republic of the Congo is the granting of bank credits.This credit-granting activity creates risks and the credit risk is the most critical.It is therefore important that this credit risk be managed prudently to avoid its negative effects on the profitability of banks.The main objective of this study was to find the impact of credit risk management on the financial profitability of the Congo's commercial banks.The specific objectives were to find the effects of CAR and NPLR on the performance of commercial banks.In this study,we considered independent variables the CAR and NPLR while the dependent variables were ROE and ROA.We used commercial banks in the Democratic Republic of the Congo as a study population,and as a sample the four largest banks in the period from 2009 to 2016.Data was diagnosed for and treated,where necessary,of the problems of panel regression.Using a fixed effects model specification a panel Estimate Generalized Least Squares regression was done on the data using E views software.Adopting a 5%non-directional test of hypothesis,the study found a capital adequacy ratio has statistically significant effect on commercial banks performance in Democratic Republic of Congo.For the second objective which was to determine the relationship between non performing loans ratio and performance of banks,the study also concluded that NPLR has statistically significant effect on commercial banks.But we have remarked that there is a negative relationship between NPLR and ROE and ROA;and there is a positive relationship between the CAR and ROE and ROA.The results of the study reveal that banks with high capital adequacy ratios can better advance more loans and absorb credit losses each time they face it,especially in the context of Congolese banks where the uncertainty of reimbursement is high and thus record a better profitability.We can conclude that the more risk management within commercial banks is efficient,the higher is the profitability of banks.