Credit and Liquidity Risk Assessment of NCC Bank: A Correlational Analysis

Mapping Intimacies ◽

10.21203/rs.3.rs-1197595/v1 ◽

2021 ◽

Author(s):

Md. Ataur Rahman Chowdhury

Keyword(s):

Risk Assessment ◽

Credit Risk ◽

Recovery Rate ◽

Default Risk ◽

Liquidity Risk ◽

Correlational Analysis ◽

Trade Finance ◽

Potential Loss ◽

Contractual Agreement

Abstract Credit risk and default risk are two interchangeable terms. Credit risk arises mainly from the lending, trade finance, leasing, and treasury business. This can be described as a potential loss from a counterparty's failure to perform as per contractual agreement with the bank being financially incapable or unwilling to repay it. Financial incapability arises when the creditor's source of earning becomes volatile. The unwillingness comes from the creditor's tendency to cheat and to make a bulk grain from the fraudulent activities. At a stretch, credit risk for the bank illustrates that the bank's performing loan portion can turn into non-performing ones. And that will decrease the recovery rate of the loan extended, and, as a result, the bank will face trouble providing the required interest amount by the depositors. Gradually the bank will become insolvent and maybe some days a bankrupt one.

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Financial Risk Assessment: Case of „Lietuvos Geležinkeliai“, AB

Open Economics ◽

10.1515/openec-2019-0002 ◽

2019 ◽

Vol 2 (1) ◽

pp. 19-29

Author(s):

Viktorija Skvarciany ◽

Laura Germanaitė

Keyword(s):

Risk Assessment ◽

Risk Analysis ◽

Credit Risk ◽

Financial Risk ◽

Liquidity Risk ◽

Freight Transportation ◽

Short Term ◽

Financial Report ◽

Net Profit ◽

Key Indicators

AbstractThis research paper focuses on the analysis of the financial risk of Lietuvos geležinkeliai, AB (eng. Lithuanian Railways), which activities are passenger and freight transportation by rail. In order to assess the financial risk of the leading company areas of financial risk were identified and are as follows: liquidity risk, credit risk and market risk. However, due to limited access to statistics only financial report of the organisation were analysed and, hence, just liquidity and credit risk were investigated. Consequently, the limitation of the current research is that only two categories of financial risk were analysed. For the purpose of financial risk analysis, the key indicators of liquidity and credit risk were distinguished from the literature. The results showed that the biggest problem of the company is too small short-term assets and the profitability indicators, which were strongly influenced by net profit (loss).

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Liquidity Gap Report for Stress Testing Structural Liquidity Risk

GIS Business ◽

10.26643/gis.v12i6.3313 ◽

2017 ◽

Vol 12 (6) ◽

pp. 43-53

Author(s):

Eugenia Schmitt

Keyword(s):

Risk Assessment ◽

Risk Evaluation ◽

Stress Testing ◽

Gap Analysis ◽

Liquidity Risk ◽

Methodological Basis ◽

Qualitative Risk Assessment ◽

The Future ◽

Liquidity Gap

The need to focus on banks funding structure and stress testing in an explicit way arose as a consequence of the crisis of past decades. Liquidity risks usually occur as a consequence of other kinds of risks, hence analysing scenarios in a prospective manner is essential for the assessment if the bank can fulfill its obligations as they come due and if its funding costs are appropriate. The structural liquidity risk and the degree of the liquidity mismatch can be measured based on the liquidity gap analysis, where expected cash-in- and outflows, divided in different time-buckets are depicted. The liquidity gap report (LGR) shows if a liquidity shortcoming appears in the future and how high is the amount a bank would have to pay, if any hedging were not possible. This paper shows how to build a comprehensive LGR which is the base for both, liquidity and wealth risk evaluation. To improve the accuracy of the forecast, the counterbalancing capacity will be incorporated into the LGR. This tool is a methodological basis for quantitative and qualitative risk assessment and stress testing.

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