Edward Attah-Botchwey, Kofi Kodua Sarpong, Josephine ofosu Mensah-Ababio, Mary Essiaw, Randy Roland Barnor
The banking sector is a wealth-creating sector in all economies, with commercial banks playing a significant role in the development and growth of many local businesses. Credit Risk Management (CRM) is key to a bank's success, as it determines whether a borrower is creditworthy or not. To mitigate credit risk, banks must develop effective strategies like hedging, diversification, and capital adequacy ratio management. This study will analyze GCB Bank's case to determine how credit risk management influences the loan performance of commercial banks. The research method used in this study was a survey that had both descriptive and exploratory features. To determine the sample size, the Yamane formula was used. Therefore, the study randomly sampled 248 respondents out of 650 for data collection. The questionnaire was the research instrument used for collecting data. The survey mainly consisted of closed-ended questions. Descriptive statistics such as frequency, mean, percentage, standard deviation, and mean were all computed using Microsoft Excel. The study's findings reveal a satisfactory performance by GCB Bank in risk avoidance, risk monitoring, and loan performance, as perceived by the respondents. However, opportunities for improvement were highlighted, specifically in the technical feasibility and credit rating components of risk avoidance, regulatory compliance within risk monitoring, and the management of loan default rate in terms of loan performance. Therefore, while the bank's strategies are generally effective, enhancements in these areas could contribute to an even better overall performance. The study recommends enhancing the analysis of credit history in risk avoidance, emphasizing economic and market conditions in risk monitoring, and improving customer service and incentivizing timely loan repayments to improve loan performance.