Chapter One — 1.1 Background to the Study

Credit Risk Management has increasingly attracted the attention of researchers, regulators, and practitioners concerned with economic growth. This growing interest reflects the recognition that credit risk management does not operate in isolation, but interacts with a wider set of institutional and market conditions found within Ogun State.

Ogun State presents a useful setting for examining this relationship precisely because the conditions there — structural, regulatory, and behavioural — differ from those typically assumed in the broader literature, most of which draws on evidence from more developed economies.

1.2 Statement of the Problem

While credit risk management is widely discussed in policy and industry circles, empirical evidence on its actual effect on economic growth within Ogun State remains sparse and, in places, contradictory. This lack of localized, rigorous evidence makes it difficult for decision-makers to know with confidence whether current approaches to credit risk management are helping or hindering economic growth — a gap this study sets out to close.

1.3 Objectives of the Study

1. To examine the effect of Credit Risk Management on economic growth in Ogun State.
2. To assess the extent to which credit risk management influences economic growth within the study area.
3. To identify the challenges associated with credit risk management in relation to economic growth.
4. To recommend strategies for optimizing credit risk management in order to improve economic growth.

1.4 Research Questions

1. What is the effect of credit risk management on economic growth in Ogun State?
2. To what extent does credit risk management influence economic growth within the study area?
3. What challenges are associated with credit risk management in relation to economic growth?
4. What strategies can be adopted to optimize credit risk management in order to improve economic growth?

1.5 Significance of the Study

This study is significant to a range of stakeholders. For policymakers and regulators, the findings offer evidence to guide the design of frameworks that support healthier outcomes around economic growth. For managers and practitioners within Ogun State, the study provides practical insight into how credit risk management can be better managed. Finally, it contributes to the academic literature on finance / banking by extending existing knowledge into a specific empirical context, and offers a reference point for future researchers.

1.6 Scope of the Study

The study is limited to an examination of Credit Risk Management and its relationship with economic growth within the context of Ogun State. It reflects a MSc-level scope of analysis and relies on data and perspectives available within that scope; generalizing the findings beyond this specific context should therefore be done with appropriate caution.