The Impact of Credit Risk Management on Bank Performance

Abstract

This research aims to examine the impact of the independent variable credit risk management on the dependent variable bank’s financial performance of commercial and Islamic banks. The sample covers 6 banks, three commercial banks, and three Islamic banks in a time from 2016 to 2020 on quarter financial statements. In this research a regression model was used to examine the relationship between credit risk management and bank’s financial performance. Finally, the regression model uncovered the negative significant relationships between the financial performance represented by the Return on Assets and the Cost per Loan Assets and the positive relationship with Capital Adequacy Ratio to 5% significance.