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 THE EFFECT OF OPERATIONAL RISK MANAGEMENT PRACTICES ON THE FINANCIAL PERFORMANCE IN COMMERCIAL BANKS IN TANZANIA

2016 ◽  
Vol 1 (1) ◽  
pp. 29
Author(s):  
Kerongo Maatwa Meshack ◽  
Rose Wairimu Mwaura
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Commercial Banks ◽  
Management Practices ◽  
Operational Risk ◽  
Operational Efficiency ◽  
Primary Data ◽  
Operational Risk Management ◽  
Insolvency Risk

Purpose: The purpose of the study was to determine the effect of operational risk management practices on the financial performance in commercial banks in TanzaniaMethodology: The research problem was studied by use of a descriptive research design. The population of the study consisted of all commercial banks in Tanzania. The study used the sample size of 34 commercial banks in Tanzania. Therefore all the commercial banks participated in equally. Questionnaires were the primary data collection tool in this study. The data gathered from the respondents shall be analyzed and presented using descriptive statistics.Results: The study found that the three independent variables in the study credit risk, Insolvency risk and Operational efficiency influenced the financial performance for the period under study. Credit risk Insolvency risk   and Operational efficiency influenced commercial banks financial performance for the period of study.Unique contribution to theory, practice and policy: This study therefore recommends that the commercial banks should handle their operations appropriately as the changes in the factors like Insolvency and Credit risk bring about an effect on the profitability of commercial banks hence affecting their financial performance

Impact of Ownership and Size on Operational Risk Management Practices: A Study of Banks in India

2017 ◽  
Vol 18 (3) ◽  
pp. 795-810 ◽  
Author(s):  
Deepak Tandon ◽  
Yogieta S. Mehra
Keyword(s):  
Risk Management ◽  
Factor Analysis ◽  
Data Collection ◽  
Management Practices ◽  
Operational Risk ◽  
Test Reliability ◽  
Operational Risk Management ◽  
Data Collection And Analysis ◽  
Loss Data ◽  
The Impact

The financial crisis and resulting failure of large banks worldwide has shaken the entire world. Improper management of operational risk has been touted as one of the reasons for this failure. In light of the rising importance of operational risk management (ORM) in banks, the study explores the range of ORM practices followed by a cross section of Indian banks and compares them with the banks worldwide. The study also analyses the impact of size and ownership of banks on these practices. Reliability analysis using Cronbach alpha model, Kaiser–Meyer–Olkin (KMO) measure of sampling adequacy and Bartlett’s test of sphericity was used to test reliability of questionnaire and justifies the use of factor analysis. Factor analysis was performed to extract the most important variables in ORM. The small size of bank was observed to be a deterrent to deep involvement of operational risk functionaries, collection and usage of external loss data and data collection and analysis. Further, the performance/preparedness of public sector and old private sector banks lagged behind peers in usage of key reporting components, such as risk and control self-assessment (RCSA), key risk indicators (KRI), scenarios, collection and usage of external loss data, data collection and analysis and quantification and modelling of operational risk.

scholarly journals Does Credit Risk Management affect the Financial Performance of Commercial Banks in Kosovo?

2018 ◽  
Vol 7 (2) ◽  
pp. 49-57
Author(s):  
Rrustem Asllanaj
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Multiple Regression ◽  
Commercial Banks ◽  
Multiple Regression Model ◽  
Capital Adequacy ◽  
Regression Equations ◽  
Credit Risk Management ◽  
The Impact

This study analyses the impact of credit risk management on financial performance of commercial banks in Kosovo, and comparing the relationship between the determinants of credit risk management and financial performance by using CAMEL indicators. Panel data of 85 observations from 2008 to 2012 of ten commercial banks was analysed using multiple regression model. Findings through multiple regression analysis are presented in forms of tables and regression equations. The study also elaborates whether capital adequacy, asset quality, management efficiency, earnings and liquidity have strong or weak relationship with financial performance of commercial banks. The study concludes that CAMEL model can be used as a system of assessment and rating of credit risk management by commercial banks in Kosovo.

scholarly journals Effect of Risk Management Practices On Corporate Investment of Financial Institutions in Rwanda: A Case Study of Selected Commercial Banks

2019 ◽  
Vol 4 (4) ◽  
Author(s):  
Emmanuel Byamungu ◽  
Irechukwu Eugenia Nkechi ◽  
Henry Jefferson Ogoi
Keyword(s):  
Risk Management ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Management Practices ◽  
Operational Risk ◽  
Corporate Investment ◽  
Market Risk ◽  
Operational Risk Management ◽  
Strategic Risk ◽  
Strategic Risk Management

Risk management practices are currently a subject of interest and a novel impression beneath research and application by diverse organizations. Nevertheless, there seems much to be debated on this subject in terms of a general strategic risk management practices statement. There is uncertainty like, when there should be a declaration for each principal risk category the organization experiences or should exist a general risk management practices for the organization. A risk management practice is about achieving corporate goals. For many financial institutions (FIs), dual goals exist such as the social and economic perspectives. This study sought to analyze the effect of strategic risk management practices on corporate investment of selected financial institutions in Rwanda. The study aimed at establishing the effect of operational risk management practices, market risk management practices, compliance risk management practices and governance risk management practices on corporate investment in selected commercial banks in Rwanda. The study adopted descriptive research design. The study targeted 95 managers from finance, internal audit, risk compliance and operations departments. The sample size was 77 respondents. The research was conducted using primary and secondary data, which includes survey forms (questionnaires), interviews as well as reports of the targeted institutions. Information for the research were gathered utilizing organized surveys forms that were distributed to the targeted respondents. Narrative information obtained from interviews and open-ended questions in the questionnaire were analyzed using qualitative approaches. Validity and reliability of the instruments were tested using the Cronbach Alpha test retest methods. With the aid of Statistical Package for Social Science version 21.0, both descriptive statistics such as the means, modes, standard deviation, variances and inferential statistics were analyzed. The research revealed that management of operational risk has a constructive effect financial outcomes performance of financial institutions in Rwanda. The study found that there is a correlation between both operational risk management and market risk management and performance of the financial institutions. The research findings revealed that operational risk management (r=0.096, p<0.01), market risk management (r=0.506, p<0.01) and compliance risk (r=0.612, p<0.01) on corporate investments.

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 Impact of Credit Risk Management Systems on the Financial Performance of Commercial Banks in Uganda

2018 ◽  
Vol 66 (6) ◽  
pp. 1627-1635
Author(s):  
Isah Serwadda
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Commercial Banks ◽  
Risk Measures ◽  
Secondary Data ◽  
Credit Risk Management ◽  
Loan Loss ◽  
Loan Loss Provisions ◽  
The Impact

The paper is set to analyse the impact of credit risk management on the financial performance of commercial banks in Uganda for a period of 2006–2015 using panel data for a sample of 20 commercial banks. The study employs return on assets as a dependent variable and non‑performing loans, growth in interest earnings and loan loss provisions to total loans as credit risk measures. Secondary data is sourced from the Bank scope database, African development bank and the central bank of Uganda. The study employs descriptive statistics, regressions and correlation analysis. Regression models are to estimate the magnitude of significance of credit risk management on the performance of commercial banks in Uganda. The study revealed that credit risk management impacts on the performance of Ugandan commercial banks. The results portrayed that banks’ performance was inversely influenced by non‑performing loans which may expose them to large magnitudes of illiquidity and financial crisis. Thus given such results, the researcher recommends that banks need to enhance their credit risk management techniques not only to earn more profits but also to maintain a qualitative asset portfolio and attention be given to non‑performing loans, loan loss provision to total loans and growth in interest earnings that were found to be significant. Banks need to design appropriate credit policies that must handle all necessary conditions before advancing credit to their customers and also develop strong credit administration committees and teams that must conduct appropriate and sound loan appraisal evaluations and which must also monitor the loans throughout the required processes right from extending a loan to a customer up to the completion of loan repayments so as to mitigate credit risks.

scholarly journals Do operational risk and corporate governance affect the banking industry of Pakistan?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Komal Altaf ◽  
Huma Ayub ◽  
Malik Shahzad Shabbir ◽  
Muhammad Usman
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Commercial Banks ◽  
Operational Risk ◽  
Primary Data ◽  
Monitoring And Control ◽  
Content Type ◽  
Operational Risk Management ◽  
And Control ◽  
The Impact

PurposeDue to increase in operational risk, banks are facing huge losses. In order to avoid losses, banks need to manage operational risk. This study aims to analyze the impact of operational risk management (ORM) processes, which include identification, assessment, analysis, monitoring and control in the presence of corporate governance (CG) that can also contribute to effective ORM practices.Design/methodology/approachOperational risk management processes are used to manage operational risk along with CG. Primary data are collected through questionnaire from (167) operational risk managers of commercial banks. Multiple linear regressions has been run to analyze the data.FindingsResults indicate significant impact of CG and operational risk identification (ORI), monitoring and control on ORM practices in commercial banks of Pakistan.Originality/valueThe study suggests policy makers to improve the ORM framework by CG. Beside this, in order to lessen operational risk, proper identification, monitoring and control of operational risk could also contribute.

scholarly journals Effects of Selected Financial Management Practices on Financial Performance of Commercial Banks in Kenya

2021 ◽  
Vol 6 (1) ◽  
pp. 17-38
Author(s):  
Faith Njeri Harrison ◽  
Dr. Monica Muiru
Keyword(s):  
Risk Management ◽  
Capital Structure ◽  
Financial Performance ◽  
Financial Management ◽  
Commercial Banks ◽  
Management Practices ◽  
Management Practice ◽  
Secondary Data ◽  
Credit Risk Management ◽  
The Relationship

Purpose: The main aim of the study was to determine effects of selected financial management practices on financial performance of commercial banks in Kenya. The research was guided by the following specific objectives; to determine the influence of liquidity management, capital structure management, credit risk management and working capital management on the financial performance of commercial banks in Kenya.Methodology: The research employed a descriptive research design. Census method of sampling was employed, all the 43 commercial banks formed the study units. Both primary and secondary data were used. Secondary data was obtained from the audited annual financial reports of the commercial banks in Kenya while primary data was collected using questionnaire which was designed in form of Likert scale. Descriptive and inferential statistics were used, whereby correlation and regression were used to establish the strength of the relationship between the financial management practices and financial performance of the commercial banks. Data was presented inform of tables, mean and standard deviation. Correlation analysis was performed to examine the relationship between the financial management practices and financial performance of the commercial banks.Results: The study concludes that liquidity management had positive significant effect on the financial performance of commercial banks in Kenya.  Measuring liquidity risk is important to making sure that liquidity problems are identified in time.  The study concludes that capital structure management practice has positive significant effect on the financial performance of commercial banks in Kenya. On credit risk management practice, the research found strong positive significant on the financial performance of commercial banks in Kenya. Most of financial institutions have risk eliminating strategy in place, proper risk management. Finally, the study concludes that working capital management practice has positive significant on the financial performance of commercial banks in Kenya.Unique contribution to theory, policy and practice: The research recommends that banks management should make sure that they maintain substantial levels of liquidity, so as to maintain competitive performance. Commercial institution must have a feasible capital structure in place that addresses issues such, as flexibility where changes in the capital market should be well adapted to the capital structure.

scholarly journals Operational Risk Management and Customer Complaints in Omani Banks

2021 ◽  
Vol 5 (1) ◽  
pp. 200-210
Author(s):  
Rawan Khamis AL-kiyumi ◽  
Zamzam Nasser AL-hattali ◽  
Essia Ries Ahmed
Keyword(s):  
Risk Management ◽  
Commercial Banks ◽  
Negative Impact ◽  
Operational Risk ◽  
The Other ◽  
Operational Risk Management ◽  
Customer Complaints ◽  
A Value ◽  
The Impact ◽  
The Relationship

The aim of this research is to analyze the relationship between operational risk management and customer complaints in Omani banks. Initially, the current research carried out a quantitative approach on the concepts which connect the variables of the current research, where the data have been collected via a survey on commercial banks in Oman. The findings demonstrate that the operational risk management has a negative and significant link with customer complaints due to there is a proper manner in dealing with risks. On the other hand,  the findings revealed that there is a negative impact on absence to deal with risks facing Omani banks. Also, it has been noted that in the event of an increase in operational risk management, customers' complaints are decreased. The current research has added a value and notable contribution lies in its elucidation for the importance of the impact of operational risk management on customer complaints in Omani banks

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