scholarly journals The Impact of Risk Management on Financial Performance of Banks: The Case of Jordan

2021 ◽  
Vol 12 (5) ◽  
pp. 1332-1342
Author(s):  
Ayman Abu-Rumman, Et. al.
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
Risk Reduction ◽  
Management Practices ◽  
Global Financial Crisis ◽  
Market Risk ◽  
Management Policy ◽  
Quantitative Methodology ◽  
Unit Increase ◽  
The Impact

Scholars, professionals, and regulators regard efficient risk management as a pillar of bank management. The Basel Committee on Banks Regulation has introduced the Basel I Agreements, accompanied by the Basel II Agreements and recently the Basel III Agreement, to deal with this issue in the awareness of this circumstance and the need for the holistic approach to managing bank risk. Risk reduction is one of the determinants of banks' returns. Moreover, risk reduction, if practical, avoids or mitigates unnecessary threats and effectively controls the payouts. The latest global financial crisis taught us that risk reduction and implementation are necessary to achieve continued success objectives. The purpose of this study is to analyze Lebanese banks ' risk management policy and its effect on bank performance. This study investigates the impact of risk management practices on Lebanese banks' financial performance. Many banks had been facing risk management practices and default risks in loans because of the current financial and economic situations that Jordan is passing through. The research implemented the quantitative methodology by distributing the questionnaires to over 300 participants; however, only 123 respondents replied to them. The results were analyzed using regression analysis and proved a relationship between risk management and financial performance. The results showed a direct relationship between credit, liquidity, market risk, and financial performance. The findings showed that For every one unit increase in risk control, the risk financial performance is affected by 1%, while for every one unit increase in credit risk, the risk financial performance is affected by 1.6%, while for every one unit increase in market risk, the financial performance is affected by 1.5% and for every one-unit increase in liquidity risk the financial performance is affected by 4.7%.

Managing risk in mergers and acquisitions activity: beyond ‘good’ and ‘bad’ management

2015 ◽  
Vol 30 (2) ◽  
pp. 160-175 ◽  
Author(s):  
Alnoor Bhimani ◽  
Mthuli Ncube ◽  
Prabhu Sivabalan
Keyword(s):  
Risk Management ◽  
Management Practices ◽  
Global Financial Crisis ◽  
Management Strategies ◽  
Future Research ◽  
Agency Conflicts ◽  
Complex Behaviour ◽  
Content Type ◽  
The Global Financial Crisis ◽  
The Impact

Purpose – This paper aims to assess the impact of the presence/absence of risk management practices on the risk of merger and acquisition (M&A) failure. Design/methodology/approach – An agency theoretic perspective is adopted, along with a mixed-methods approach to study managerial complexity beyond simply “good” and “bad”. The focus is on an agency conflicts. Findings – The authors first present an integrated framework that classifies managerial behaviour and risk management, where M&A bids can become vehicles for maximising managerial benefits rather than shareholder value. The authors proceed to consider M&A activity that benefits both managers and shareholders in the presence of risk management strategies. Research limitations/implications – The paper highlights the benefits of multiple paradigms and research paths that address dimensions captured by an agency theoretic perspective. Practical implications – The authors regard this paper as having particular significance in that the global financial crisis has impacted M&A activities and objectives, shifting the employment and related risks faced by managers. Originality/value – The paper suggests future research paths to advance the understanding of the complex behaviour of managers involved in M&A activities that go beyond the classification of “good” and “bad” managers.

scholarly journals Knowledge Management and its Effects on Financial Performance: Evidence from Dangote Flour Mills, Ilorin

2020 ◽  
Vol 4 (2) ◽  
pp. 34-42
Author(s):  
Bolatito Amudat Brimah ◽  
Wahid Damilola Olanipekun ◽  
Ayodeji Gbenga Bamidele ◽  
Musa Ibrahim
Keyword(s):  
Organizational Culture ◽  
Knowledge Management ◽  
Financial Performance ◽  
Information And Communication Technologies ◽  
Corporate Culture ◽  
Management Practices ◽  
Management Policy ◽  
Strategic Leadership ◽  
Dynamic Learning ◽  
The Impact

This paper summarizes the arguments and counterarguments within the scientific discussion on the issue of knowledge management and their impact on the financial performance of economic entities. It is determined that despite the key role of knowledge both for the development of the country (which in the 21st century is based mainly on knowledge) and to increase the value of the company, today companies do not fully use arrays of knowledge and data, which forms barriers to increase competitiveness in the strategic perspective. The main purpose of this study is to assess the impact of knowledge management on the financial performance of companies. Data for the study were obtained from a primary source based on a structured questionnaire with which Dangote Flourmills staff worked. The methodology of the work is a software product for statistical data processing – STATA 11, while the data analysis was performed on the basis of regression analysis, which was used to test hypotheses at the level of 5% significance. The analysis of the data confirmed the significance of the impact of all indicators of knowledge management on the financial performance of the economic entity. The results theoretically confirmed and empirically proved that strategic leadership, organizational culture, information, and communication technologies, effective human resource management practices have a significant impact on financial performance. This study concludes that knowledge management has a significant impact on the financial performance of businesses. The paper states that knowledge management activities help to focus the company’s management on the accumulation, storage, and use of knowledge to solve problems, dynamic learning, strategic planning, and making sound financial and economic decisions. The authors have formed the following recommendations: assistance from the management of the company to exchange knowledge, training and professional development; introduction of the latest digital technologies to improve communication and management mechanisms, based on the specifics, features, and needs of companies; ensuring and developing a corporate culture that allows you to balance and coordinate the actions of management policy. Keywords: knowledge management, human resources, strategic leadership, organizational culture, financial results of the company.

scholarly journals DAMPAK MANAJEMEN RISIKO PADA KINERJA KEUANGAN BANK UMUM KONVENSIONAL DI INDONESIA

2021 ◽  
Vol 8 (1) ◽  
pp. 29
Author(s):  
Kiki Afita Andriyani ◽  
Farah Margaretha Leon
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
Financial Stability ◽  
Management Practices ◽  
Liquidity Risk ◽  
Operational Risk ◽  
Interest Rate Risk ◽  
Bank Management ◽  
Conventional Banks ◽  
The Impact

<p align="center"><strong><em>Abstract</em></strong><strong><em> </em></strong></p><p><em>This study was conducted to examine the impact of risk management on the financial performance of conventional banks in Indonesia. Effective and efficient banking industry financial performance from time to time is highly expected to maintain banking financial stability itself and even the stability of a country. The increase in losses borne by banks as a result of inadequate risk management practices is a major concern of bank management and regulators. The data tested in this study is conventional bank data that listed on the Indonesia Stock Exchange during the 2015-2019 period. Data analysis using Multiple Linear Regression Model. The results show that there is a significant relationship between market risk management (NIM), operational risk management (BOPO) and liquidity risk management (LDR) with bank financial performance (ROA). Meanwhile, credit risk management (NPL) has no effect on bank financial performance (ROA). For this reason, it can be said that adequate risk management practices as demonstrated by the ratio of interest rate risk, liquidity risk and operational risk are the main driving factors for profitability for the banking sector in Indonesia</em>. <em>Therefore, bank management must mobilize resources to understand a sound risk management system which in turn will have an impact on improving the bank's financial performance.</em></p><p><strong><em>Keywords:</em></strong><strong> </strong><strong><em>Conventional Banks, Risk Management, Financial Performance</em></strong><strong>.</strong><strong></strong></p>

scholarly journals Analysis of Impacts of Operational Risk Management Practices on Banks’ Financial Performance: Study of Selected Commercial Banks in Nigeria

2020 ◽  
Vol 9 (1) ◽  
pp. 22-35
Author(s):  
Diekolola Oye
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
Commercial Banks ◽  
Management Practices ◽  
Secondary Data ◽  
Operational Risk ◽  
Multiple Regression Model ◽  
Performance Study ◽  
Operational Risk Management ◽  
The Impact

Increase in losses borne by banks as a result of inadequate operational risk management practices and the adverse impact on banks’ financial performance has been a major concern to bank management and regulators. This study analysed the impact of operational risk management practices on the financial performance of commercial banks in Nigeria. 10-years (2008 - 2017) secondary data extracted from audited financial statements of selected commercial banks in Nigeria was used for the study. The data was analysed using the Linear Multiple Regression Model. The results showed that there is a positive relationship between operational risk management and the financial performance of banks. The findings revealed that sound operational risk management practices impact positively on the financial performance of banks. We, therefore, recommend that banks’ management should deploy adequate resources towards understanding operational risk to ensure sound operational risk management and improved financial performance of banks.

scholarly journals How does risk management affect financial performance? Evidence from Chinese listed commercial banks

2019 ◽  
Vol 9 (4) ◽  
pp. 20-29 ◽  
Author(s):  
Guan-Chih Chen ◽  
Shuling Tsao ◽  
Ren-Her Hsieh ◽  
Pan Hu
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
Commercial Banks ◽  
Global Financial Crisis ◽  
Risk Index ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Capital Adequacy ◽  
Insolvency Risk ◽  
The Impact

An increasing number of commercial banks in China began to pay attention to comprehensive risk management after the global financial crisis. With the accelerated pace at which China’s commercial banks are expanding abroad, establishing a comprehensive risk management system appropriate for the international financial market has become a critical hurdle for these banks’ further development. This paper explores the impact of risk management on the financial performance of listed banks in China, comparing state-owned banks and non-state-owned banks, by establishing multiple linear regression analysis models. The results reveal a significant impact on the financial performance of state-owned commercial banks, such as on insolvency risk index, loan-to-deposit ratio, nonperforming loan ratio, and bank size. Insolvency risk index and bank size are found to positively impact state-owned commercial banks’ financial performance. For non-state-owned banks, capital adequacy ratio, nonperforming loan ratio, and bank size have significantly impact financial performance, with bank size positively influencing financial performance.

The Impact of Shariah Governance and Corporate Governance on the Risk Management Practices: Evidence from Local and Foreign Islamic Banks in Malaysia

2018 ◽  
Vol 15 (2) ◽  
pp. 1-20
Author(s):  
Sabri Embi ◽  
Zurina Shafii
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Management Practices ◽  
Principal Component ◽  
T Test ◽  
The Body ◽  
Primary Data ◽  
Islamic Banks ◽  
Shariah Governance ◽  
The Impact

The purpose of this study is to examine the impact of Shariah governance and corporate governance (CG) on the risk management practices (RMPs) of local Islamic banks and foreign Islamic banks operating in Malaysia. The Shariah governance comprises the Shariah review (SR) and Shariah audit (SA) variables. The study also evaluates the level of RMPs, CG, SR, and SA between these two type of banks. With the aid of SPSS version 20, the items for RMPs, CG, SR, and SA were subjected to principal component analysis (PCA). From the PCA, one component or factor was extracted each for the CG, SR, and RMPs while another two factors were extracted for the SA. Primary data was collected using a self-administered survey questionnaire. The questionnaire covers four aspects ; CG, SR, SA, and RMPs. The data received from the 300 usable questionnaires were subjected to correlation and regression analyses as well as an independent t-test. The result of correlation analysis shows that all the four variables have large positive correlations with each other indicating a strong and significant relationship between them. From the regression analysis undertaken, CG, SR, and SA together explained 52.3 percent of the RMPs and CG emerged as the most influential variable that impacts the RMPs. The independent t-test carried out shows that there were significant differences in the CG and SA between the local and foreign Islamic banks. However, there were no significant differences between the two types of the bank in relation to SR and RMPs. The study has contributed to the body of knowledge and is beneficial to academicians, industry players, regulators, and other stakeholders.

scholarly journals Risk Management in nursing homes: an Italian experience in 2019

2020 ◽  
Vol 30 (Supplement_5) ◽  
Author(s):  
M F Furmenti ◽  
F Bert ◽  
M Rucci ◽  
U Fiandra ◽  
A Scarmozzino ◽  
...  
Keyword(s):  
Risk Management ◽  
Nursing Homes ◽  
Management Practices ◽  
Well Being ◽  
The Elderly ◽  
Management Plan ◽  
Management Policy ◽  
Insurance Company ◽  
Term Care ◽  
Starting Point

Abstract Background The ageing of the European population leads to an increasing demand for Long-Term Care services. The security and well-being of the elderly population hosted in nursing homes (NHs) needs an effective Risk Management policy, officially sanctioned in Italy by the so-called “Legge Gelli” n.24 (March 8th, 2017) and the Directive 2011/24/EU on the application of patients' rights in cross-border healthcare. In order to verify the effective application of common “best practices” in terms of Risk Management in NHs, a tool useful to analyse risk management attitudes in Northern Italy was conceived and applied in a sample of NHs. Methods The tool, developed in collaboration with the health insurance company SHAM Italia, is composed of 124 items (with a dichotomous answer -YES/NO) on topics related to various Risk Management practices. This tool was submitted in a face-to-face interview to several Directors (Health Directors or Nursing Coordinators) of NHs in the Piedmont Region. A list of randomly-chosen NHs was contacted: 4 of them were selected for the pilot study and compiled the questionnaire. Answers were gathered and analyzed through Microsoft Excel. Results Only the 25% of NHs has a Risk Management plan with objectives and indicators of effectiveness and uses Risk Analysis instruments for a pre- and post-” risk detection. Only one has employees working mainly on Risk Management alone. The 75% of the reported events were “Adverse Events”, and all the NHs (100%) have a protocol for a patient voluntary departure or for fall prevention or for bedsores prevention; while 50% have a protocol for prevention of aggressions towards operators or for patients' suicide prevention. Conclusions This work provides a starting point to face new challenges that are looming on the European Health-care Systems: the care for the elderlies needs to be perfected to reduce inefficiencies, cut useless costs and improve safety of patients in the NHs setting. Key messages Despite safety of older patients in nursing homes is not only important but mandatory in Italy, risk management tools for this setting are lacking in literature. A new tool applied in Italian nursing homes showed that risk management needs to be implemented in practice and these results can be extended to European context.

Do disclosure and transparency affect bank’s financial performance?

2019 ◽  
Vol 19 (6) ◽  
pp. 1344-1361
Author(s):  
Isaiah Oino
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Financial Performance ◽  
Financial Institutions ◽  
Content Type ◽  
Loan Portfolios ◽  
Cent Level ◽  
Transparency And Disclosure ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of transparency and disclosure on the financial performance of financial institutions. The emphasis is on assessing transparency and disclosure; auditing and compliance; risk management as indicators of corporate governance; and understanding how these parameters affect bank profitability, liquidity and the quality of loan portfolios. Design/methodology/approach A sample of 20 financial institutions was selected, with ten respondents from each, yielding a total sample size of 200. Principal component analysis (PCA), with inbuilt ability to check for composite reliability, was used to obtain composite indices for the corporate governance indicators as well as the indicators of financial performance, based on a set of questions framed for each institution. Findings The analysis demonstrates that greater disclosure and transparency, improved auditing and compliance and better risk management positively affect the financial performance of financial institutions. In terms of significance, the results show that as the level of disclosure and transparency in managerial affairs increases, the performance of financial institutions – as measured in terms of the quality of loan portfolios, liquidity and profitability – increases by 0.3046, with the effect being statistically significant at the 1 per cent level. Furthermore, as the level of auditing and the degree of compliance with banking regulations increases, the financial performance of banks improves by 0.3309. Research limitations/implications This paper did not consider time series because corporate governance does not change periodically. Practical implications This paper demonstrates the importance of disclosure and transparency in managerial affairs because the performance of financial institutions, as measured in terms of loan portfolios, liquidity and profitability, increases by 0.4 when transparency and disclosure improve, with this effect being statistically significant at the 1 per cent level. Originality/value The use of primary data in assessing the impact of corporate governance on financial performance, instead of secondary data, is the primary novelty of this study. Moreover, PCA is used to assess the weight of the various parameters.

scholarly journals Risk management of Islamic banks: A search for empirical evidences

2017 ◽  
Vol 14 (2) ◽  
pp. 8-16
Author(s):  
Sayed M. Fadel ◽  
Jasim Al-Ajmi
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Management Practices ◽  
Global Financial Crisis ◽  
Risk Mitigation ◽  
Balance Sheet ◽  
Islamic Banks ◽  
Risk Levels ◽  
Management Techniques ◽  
The Global Financial Crisis

The objectives of this study are to determine 1) the effect of global economic and financial crisis on risk management, 2) the severity of different types of risk facing Islamic banks, 3) the risk levels of Islamic financial modes, 4) risk assessment techniques, and 5) risk management techniques. The structure of the balance sheet, the nature of Islamic finance instruments and funding sources have a great impact on the level of risk exposure of banks and the instruments. Credit risk is found to be the most serious risk, followed by liquidity risk, market risk and operational risk, in descending order of importance. As for the riskiness of Islamic financing modes, mudarabah is perceived to be the riskiest, followed by musharakah, while murabahah ranked as the least risky mode. Moreover, Islamic banks are found to use traditional risk management techniques more than sophisticated measurements. They also adopt risk mitigation techniques that are used by conventional banks in preference to techniques that are considered to be unique to Islamic banks. This paper is the first to study the risk management practices of Islamic banks operating in Bahrain. It also provides evidence about these practices after the global financial crisis that affected all countries, including Bahrain.

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