Credit Risk Management of Commercial Banks in Nepal

2019 ◽  
Vol 4 (1) ◽  
pp. 27-37
Author(s):  
Shreya Pradhan ◽  
Ajay K. Shah
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Management Practices ◽  
Risk Mitigation ◽  
Mitigation Measures ◽  
Credit Risk Management ◽  
Loan Repayment ◽  
Credit Risk Assessment

The study is primarily focused on credit risk assessment practices in commercial banks on the basis of their internal efficiency, assessment of assets and borrower. The model of the study is based on the analysis of relationship between credit risk management practices, credit risk mitigation measures and obstacles and loan repayment. Based on a descriptive research approach the study has used survey-based primary data and performed a correlation analysis on them. It discovered that credit risk management practices and credit risk mitigation measures have a positive relationship with loan repayment, while obstacles faced by borrowers have no significant relationship with loan repayment. The study findings can provide good insights to commercial bank managers in analysing their model of credit risk management system, policies and practices, and in establishing a profitable and sustainable model for credit risk assessment, by setting a risk tolerance level and managing credit risks vis-a-vis the prevailing market competition.

scholarly journals The Risk Management of Commercial Banks——Credit-Risk Assessment of Enterprises

2016 ◽  
Vol 8 (9) ◽  
pp. 69
Author(s):  
Na Luo ◽  
Jiayi Yang ◽  
Yuanfeng Zhu ◽  
Yu Zhang
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Assessment System ◽  
Assessment Model ◽  
Good Prediction ◽  
Credit Risk Management ◽  
Credit Risk Assessment ◽  
Credit Risks

With the diversified developments of the financial market, commercial banks are confronted with various risks, among which the credit risk is the core, and thus the assessment of enterprises’ credit risks is especially important in the credit process of the commercial banks. Based on the relevant researches about commercial banks’ credit risk management, the paper carries out a deep analysis on the factors that may affect the credit risk assessment and then establishes a relatively comprehensive credit risk assessment system. In this paper, we apply our risk assessment model, which is established on the basis of GRNN neural network model, to make an empirical analysis with the selected sample data. And the results suggest that the hit rates of identifying high quality enterprises and low quality enterprises are 92.16 percent and 93.75 percent, respectively, indicating that the model has realized a good prediction.

An Investigation of Credit Risk Management Strategies of Private Commercial Banks of Bangladesh

2014 ◽  
Vol 2 (2) ◽  
pp. 77-87
Author(s):  
Abu Hanifa Md. Noman ◽  
Md. Amzad Hossain ◽  
Sajeda Pervin
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Management Practices ◽  
Management Practice ◽  
Management Strategies ◽  
Third Party ◽  
Primary Data ◽  
Credit Risk Management ◽  
Risk Management Strategies

Objective - The study aims to investigate credit risk management practices and credit risk management strategies of the local private commercial banks in Bangladesh. Methodology -The investigation is conducted based on primary data collected from a set of both closed end and open end questionnaire from 23 out of 39 local private commercial banks in Bangladesh. Descriptive statistics has been used in processing the data and interpreting the results. Findings - The results reveal that credit risk management practice of the sample banks is sound which is attributed to the appropriate implementation of Basel II and credit risk management guidelines the country's central bank. The findings further show that use of Credit risk grading is most popular and effective criteria for measuring the borrowing capacity of the borrowers. In order to control credit risk and preventing losses from credit exposure banks give more focus on collateralization, accurate loan pricing and third party guarantee. Loan is monitored properly and credit reminder is given to the client if principal and interest remain outstanding for three months. The study further reveals that lack of experienced and trained credit officers, lack of genuine market information and Lack of awareness regarding non-genuine borrower are the most important problems of current credit risk management practices in Bangladesh. Novelty - To the best of the knowledge of the authors the study is the first that investigates credit risk management strategies of private commercial banks, especially on Bangladesh. Type of Paper - Empirical Keyword : Bangladesh; Commercial Bank; Credit risk; Credit risk management; Credit risk management strategies.

scholarly journals Improved forecast assessment for the expected credit losses in credit risk monitoring in commercial banks in the context of international and Russian practices

2020 ◽  
Vol 15 (3) ◽  
pp. 445-457
Author(s):  
Elena Vladimirovna Travkina ◽  
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Banking Sector ◽  
Assessment Model ◽  
Financial Instruments ◽  
Credit Risk Assessment ◽  
Ifrs 9 ◽  
Credit Losses

Current banking sector’s performance raises the issues connected with the IFRS 9 Financial Instruments driven transformation of the forecast assessment for the expected credit losses during monitoring and credit risk assessment in commercial banks. In this regard, it becomes important to conduct a comprehensive systematization of the existing Russian and international practices for monitoring and evaluating credit risk in commercial banks. The purpose of the study is to develop a comprehensive approach to the use of an effective model for the impairment of expected losses in banking activities. The novelty of the study includes the enhancement of the tools for the forecast assessment of the expected credit losses among the commercial banks’ clients to improve the credit risk management efficiency. The results from the implementation of IFRS 9 Financial Instruments in the banking area show that modern conditions maintain the uncertainty of the long-term impact of the credit risk on the commercial banks’ performance. What is more, a huge amount of additional information gives significant difficulties, which contributes into the sophisticated calculations of the future credit losses of the banks. It has been justified that a forecast assessment model for the expected credit losses of the clients during the monitoring and bank’s credit risk assessment should be based on the collective or individual ground. The efficient application of the expected losses impairment in the banking performance has been described as a fundamental tool to simulate the expected credit losses to provision for impairment. This model has been shown to be determined by the features of the credit activities and bank portfolio, types of its financial tools, sources of the available information, as well as the applied IT systems. The proposed model validation algorithm for the expected impairment losses could reduce the expected credit losses, decrease the volume of the created assessed reserves, as well as improve the overall commercial bank performance efficiency. Theoretically, the study develops the credit losses risk management in the context of the transformations in the global and Russian banking practices. From the perspective of the practical value, the research gives an opportunity to create an efficient forecast assessment model for the expected credit losses of the commercial banks’ clients, this model contributing into the cost effectiveness of the bank’s credit activities. A promising further research is considered to be aimed at developing the tools for the assessment of the commercial banks’ credit activity results in the context of the adopted changes connected with the introduction of IFRS 9 Financial Instruments in the Russian banking sector.

The relationship between credit risk management and non-performing assets of commercial banks in India

2019 ◽  
Vol 45 (3) ◽  
pp. 399-412 ◽  
Author(s):  
Sirus Sharifi ◽  
Arunima Haldar ◽  
S.V.D. Nageswara Rao
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Management Practices ◽  
Primary Data ◽  
Credit Risk Management ◽  
Content Type ◽  
Indian Economy ◽  
Indian Banks ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of credit risk components on the performance of credit risk management and the growth in non-performing assets (NPAs) of commercial banks in India. Design/methodology/approach The data are obtained from primary and secondary sources. The primary data are collected by administering questionnaire among risk managers of Indian banks. The secondary data on NPAs of Indian banks are from annual reports and Prowess database compiled by the Centre for Monitoring Indian Economy. Multiple linear regression is used to estimate the models for the study. Findings The results suggest that the identification of credit risk significantly affects the credit risk performance. The results are robust as credit risk identification is negatively related to annual growth in NPAs or loans. There is evidence in support of a priori expectation of better credit risk performance of private banks compared to that of government banks. Practical implications The study has implications for Indian banks suffering from a high level of losses due to bad loans. In addition, it will have implications for the implementation of new Basel Accord norms (Basel III) by the Reserve Bank of India. Social implications The high and rising level of NPAs will have adverse consequences for credit flow in the economy in the absence of appropriate intervention by government and central bank in the form of changes in institutional and regulatory infrastructure. The problems in banking and financial services sector will lead to lower industrial and aggregate economic growth, and lower (or negative) growth in employment. Originality/value There is little evidence on credit risk management practices of Indian banks, and its relationship with credit risk performance and NPA growth. The need for an effective risk management system to manage credit risk assumes importance and urgency in the context of high and rising NPAs of Indian banks, and the consequences for the Indian economy.

Credit Risk, Capital Adequacy and Banks Performance: An Empirical Evidence from Pakistan

2015 ◽  
Vol 5 (1) ◽  
Author(s):  
Maryam Mushtaq ◽  
Aisha Ismail ◽  
Rahila Hanif
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Management Practices ◽  
Major Element ◽  
Capital Adequacy ◽  
Crucial Importance ◽  
Credit Risk Management ◽  
Risk Capital ◽  
Risk Managers

Credit risk is one of the major risks in banking operations now-a-days. For sustainable financial performance, credit risk management is of crucial importance. Non-performing loans are the major element of credit risk that negatively affects the banking performance. To cater such risk, banks have to maintain certain percentage of capital as cushion with central bank as per BASEL requirements. Efficient credit risk management contributes positively towards banking profitability. This study aims to investigate, how credit risk and capital adequacy affects the performance of commercial banks in Pakistan. This study identifies the exposure of Pakistani commercial banks towards credit risk and impact of credit risk management practices for 6 years. The findings of this study help the risk managers to ensure prudent credit risk management practices that will help in reducing non-performing loans and improving banking performance.

scholarly journals Flood Risk Management Practices in Morocco: Facts and Challenges

2021 ◽  
pp. 35-94
Author(s):  
Dalila Loudyi ◽  
Moulay Driss Hasnaoui ◽  
Ahmed Fekri
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Flood Risk ◽  
Management Practices ◽  
Swot Analysis ◽  
Risk Mitigation ◽  
Integrated Management ◽  
Flood Risk Management ◽  
Mitigation Measures ◽  
The Government

AbstractFrom ancient flood management practices driven by agricultural activities to dam’s policy for water resources management including flood protection, to the National Strategy for Natural Disaster Risk Integrated Management; Morocco has come a long way in flood risk management. This chapter describes the recurrent flooding phenomenon plaguing the country along with progress in flood risk assessment approaches in terms of technique, governance, and best practices. An extensive number of research articles, administrative documents, consultancy, and international organizations reports are analyzed to give a holistic up-to-date insight into flood risk management in Morocco and present a comprehensive and critical view from a scientific perspective. Information and data were collected from a range of various sources and synthesized to integrate all scientific and governance aspects. Though analysis of this landscape shows progresses made by the Government to protect the population and reduce flood risk, it also shows shortcomings and challenges still to be overcome. Thus, a SWOT analysis was carried out for scoping and identifying the strengths, weaknesses, opportunities, and threats pertaining to this issue. The analysis reveals various success and failure factors related to three major components: governance, risk assessment approaches, and flood risk mitigation measures sustainability.

scholarly journals Understanding risk management practices in commercial banks: The case of the emerging market

2018 ◽  
Vol 8 (2) ◽  
pp. 54-62 ◽  
Author(s):  
Bashir Muhammad ◽  
Sher Khan ◽  
Yunhong Xu
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Risk Analysis ◽  
Credit Risk ◽  
Commercial Banks ◽  
Management Practices ◽  
Emerging Market ◽  
Risk Identification ◽  
Risk Monitoring ◽  
Credit Risk Analysis

This study examines how risk management practices can be influenced by factors, including understanding risk management, risk assessment & analysis, risk identification, risk monitoring and credit risk analysis in commercial banks of Pakistan. The collected data satisfied the reliability requirement and regression and correlation analyses were adopted. The results suggest that understanding risk and risk management (URM), risk assessment and analysis (RAA), risk identification (RI), risk monitoring (RM) and credit risk analysis (CRA) have positive significant impact on risk management practices (RMP). This suggests that commercial banks in Pakistan need to pay attention to URM, RAA, RI, RM and RA. Moreover, RM and RAA are prominent variables which influence RMP; therefore commercial banks of Pakistan should focus on RM and RAA

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