Impact of credit risk management on financial performance: A study of commercial banks in Bangladesh

As credit risk is affecting the banking industry of Bangladesh, the study aims to analyze the impact of credit risk management on financial performance of commercial banks. The study applied a deductive research design with targeting 6 commercial banks in Bangladesh, all with data spanning ten years between 2010 to 2019 with secondary data by employing panel regression analysis model. Four factors affecting financial performance of commercial banks in Bangladesh were selected and analyzed. In the study Return on asset (ROA) are used as Bank performance measurement tools and non-Performing loan (NPL), Capital Adequacy ratio (CAR) and loan to deposit ratio (LDR) are used as Credit risk indicators. The result of panel data regression analysis showed that Non-performing Loan (NPL), Capital Adequacy Ratio (CAR) had negative and statistically significant impact on financial performance of commercial banks. Whereas Loan to deposit ratio (LDR) had positive and statistically significant impact on financial performance of commercial banks. Therefore, the credit risk is negatively affecting the financial performance of commercial banks.