Determinants of Credit Risk Management and Their Relationship with the Performance of Commercial Banks in Guangdong China

Abstract

The purpose of this study is to explore the relationship of the determinants of credit risk management and performance of banks. Also, the main focus is determining the mediating role of credit risk management to the said relationship. In this research, the level of risk associated with credit risk management, in terms of environmental risk, credit appraisal measurement, and market risk analysis was measured. The performance of banks was assessed in this study. At the same time, the credit risk management of banks was also part of the assessment done in this research. The researcher used quantitative methods to achieve the purpose, research questions, objectives, and hypotheses of the paper. Descriptive research was used in order to conduct the objectives of this research. The respondents of the study are managers of banks in the Southern Region of China with a total of 97 samples that represented the whole population. The data was collected, tabulated, analyzed and interpreted by the researcher. Statistical treatments were used in order to analyze the data collected in the conduct of the survey. The results indicate a positive correlation between environmental risk and credit risk management. The study also found that credit appraisal measurement and market risk analysis have a significant relationship with credit risk management, and market risk analysis has a significant impact on credit risk management thus rejecting the null hypothesis of the study. The research results also indicate that credit risk management does not have a mediating role between the relationship of environmental risk, credit appraisal measurement, market risk analysis to bank performance thus accepting the null hypothesis of the study. A credit risk mitigation strategy was proposed based on the results and findings of the study.