Client credit arises when there is a time lag between the delivery of goods and services and when
payment is paid or received from the customer (Kakuru 2000). It's philosophy of lend now and
receive payment later. Most commercial Banks offer loans to their customer and expect
repayment on a future date (Atim, 1997)
There is risk associated with loan extension to clients. There is a likely hood that the loan
extended to the bank client may not be recovered as expected and these poses a great risk to most
commercial banks (Opio 2003). Therefore commercial banks must gain an acceptable level of
confidence before extending credit to their clients. Different clients behave differently as regards
Recovery problems of loans by commercial banks create a lot of nonperforming assets (NP A)
which greatly affects the profitability of commercial banks (Khoury 2004). The profitability of
an organization determines its degree of survival (Ross & Westerd 1998). The organizations that
fail to earn sufficient profits are normally unable to sustain their operations. Thus, profitability
avails the organization with numerous advantages (Buckle, 2000). The object of commercial
banks is to minimize costs associated with credit while maximize the benefits of client credit,
ultimately profit (Pandey 1995). Credit management is therefore key in most Commercial banks.
However many commercial banks continue to experience high default rates which have greatly
affected their profitability.
Edu, F (2021). The Effects Of Credit Policy On The Performance Of Commercial Banks. Afribary.com: Retrieved June 18, 2021, from https://afribary.com/works/the-effects-of-credit-policy-on-the-performance-of-commercial-banks
Frontiers, Edu. "The Effects Of Credit Policy On The Performance Of Commercial Banks" Afribary.com. Afribary.com, 10 Jun. 2021, https://afribary.com/works/the-effects-of-credit-policy-on-the-performance-of-commercial-banks . Accessed 18 Jun. 2021.
Frontiers, Edu. "The Effects Of Credit Policy On The Performance Of Commercial Banks". Afribary.com, Afribary.com, 10 Jun. 2021. Web. 18 Jun. 2021. < https://afribary.com/works/the-effects-of-credit-policy-on-the-performance-of-commercial-banks >.
Frontiers, Edu. "The Effects Of Credit Policy On The Performance Of Commercial Banks" Afribary.com (2021). Accessed June 18, 2021. https://afribary.com/works/the-effects-of-credit-policy-on-the-performance-of-commercial-banks