Chapter One — 1.1 Background to the Study

Over the past decade, the relationship between credit risk management and profitability of deposit money banks has become a subject of considerable debate among scholars and industry practitioners alike, particularly within the context of Evidence from Sub-Saharan Africa where operating conditions differ markedly from more developed markets.

Evidence from Sub-Saharan Africa 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 profitability of deposit money banks within Evidence from Sub-Saharan Africa 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 profitability of deposit money banks — a gap this study sets out to close.

1.3 Objectives of the Study

1. To examine the effect of Credit Risk Management on profitability of deposit money banks in Evidence from Sub-Saharan Africa.
2. To assess the extent to which credit risk management influences profitability of deposit money banks within the study area.
3. To identify the challenges associated with credit risk management in relation to profitability of deposit money banks.
4. To recommend strategies for optimizing credit risk management in order to improve profitability of deposit money banks.

1.4 Research Questions

1. What is the effect of credit risk management on profitability of deposit money banks in Evidence from Sub-Saharan Africa?
2. To what extent does credit risk management influence profitability of deposit money banks within the study area?
3. What challenges are associated with credit risk management in relation to profitability of deposit money banks?
4. What strategies can be adopted to optimize credit risk management in order to improve profitability of deposit money banks?

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 profitability of deposit money banks. For managers and practitioners within Evidence from Sub-Saharan Africa, 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 profitability of deposit money banks within the context of Evidence from Sub-Saharan Africa. It reflects a clearly defined 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.