The Effect of Credit Risk Management on Lending Performance of Bank Agriculture Branches

Today, banks play a vital role in making the relationship between actual and monetary sectors of the economy, facilitating transactions by organizing receipts and payments, and developing markets and economic growth. Credit risk is the most critical factor for banking system stability. Moreover, credit risk is the most substantial risk observed in the banking system of countries. Lack of credit risk leads to poor lending capacity and debt settlement power of monetary institutes also causes the bankruptcy of banks. credit risk brings a relative superiority for banks and financial institutes by predicting bad debts' losses. The extant study aimed to examine the effect of credit risk management on the lending performance of Bank Agriculture branches. 

This was applied research in terms of objective and a descriptive study, in terms of data collecting method. The statistical population comprised all top managers and staff working in branches of Bank Agriculture in Gilan Province, Iran. In the present paper, Morgan Table was used, and 279 people (n=279) were selected from 475 people, by using non-probability convenience sampling. The data were collected through a questionnaire. The collected data were analyzed using SPSS software. 

Research hypotheses indicated the significant effect of loan terms and conditions on the lending performance of branches of Bank Keshavarsi in Gilan. Customer evaluation had an impact on the lending performance of Bank Keshavarsi's branches in Gilan. Default lending policies affected the lending performance of Bank Keshavarsi's branches in Gilan Province. Risk control policies also had an impact on the lending performance of Bank Keshavarsi's branches in Gilan Province. 

Credit risk control and mitigation play an effective role in improving lending and credit processes and subsequently improving banks' performance. Furthermore, cretic risk control plays a fundamental role in the continuity of lending, profitability, and survival of banks and financial organizations. Credit risk provides the field for assets pricing by risk measurement and the creation of a logical link between risk and return rate. Furthermore, credit risk paves the way for the optimization of credit portfolios and determining the economic provision of banks to reduce capital costs. Therefore, improvement of risk control policies through measuring the risk of non-repayment of debt and interest rate of loans based on the risk management rules and regulations approved by respective committees lead to improvement of the lending performance of studied bank branches. On the other hand, assessment of customer's capital adequacy, ranking assets, rating branches based on the credit risk of branches (e.g., past due, deferred, and bad debts-to-total loans ratio) can be done to improve the lending performance of studied bank branches.