scholarly journals Credit Risk Management Evaluation and Bank Management Effectiveness: 1995 – 2015 Dimensionality

2020 ◽  
pp. 178-188
Author(s):  
John Nkeobuna Nnah Ugoani
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Banking System ◽  
Total Risk ◽  
Credit Risk Management ◽  
Management Effectiveness ◽  
Nonperforming Loans ◽  
Bank Management ◽  
The Board Of Directors ◽  
Banking Institution

Credit risk management is central to the success or failure of a banking institution because banks earn the greatest quantum of their interest income from interest on loans which represents a critical component of a bank’s profitability. Therefore, any carelessness with regard to credit risk management automatically results to creating huge nonperforming loans which often prepares the grounds for bank distress or failure. In the 1990s and specifically in 1995, 50 percent of 120 banks became technically distressed, as they were characterized by poor management and weak liquidity ratio. For example, in 1995, the ratio of nonperforming loans to total loans was about 33 percent compared to about 5 percent in 2015, and the average liquidity ratio of banks in 1995 was 0.49, against 58.18 in 2015. Also the loans, to deposit ratio in 1995 was 58.4 and 73.21 in 2015, while the number of banks with average liquidity ratio of less than 30 percent was 50 in 1995 against 1 in 2015. Distress persisted in the Nigerian banking system in the 1990s with dwindling profitability and the erosion of shareholders’ equity. In 1995, the adjusted shareholders funds was – N8791.1million against N3,240 billion in 2015, while the capital to total risk weighted asset ratio was about 67.18 percent in 1995 and only about 17.66 percent in 2015. In 1995, the ratio of nonperforming loans to shareholders’ funds was about 496 percent against about 13 percent in 2015. These major performance indicators showed that there was improved credit risk management and bank management effectiveness after 1995 until 2015. The expo-facto research design was employed for the study and the result showed strong positive relationship between credit risk evaluation management and bank management effectiveness. The study was not exhaustive, and further research could examine the relationship between regulatory efficiency and the performance of deposit money banks in Nigeria. The board of directors of banks should always take measures to avoid lending arrangements over and above the repayment capacity of borrowers to reduce the creation of nonperforming loans.

Impact of Financial Crisis on Credit Risk: Pre- and Post-financial Crises 
in an Emerging Economy

2020 ◽  
Vol 9 (2) ◽  
pp. 118-132
Author(s):  
Syed Moudud-Ul-Huq ◽  
Rabaka Akter ◽  
Tanmay Biswas
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Credit Risk ◽  
Commercial Banks ◽  
Global Financial Crisis ◽  
Banking System ◽  
Commercial Banking ◽  
Real Economy ◽  
Credit Risk Management ◽  
The Global Financial Crisis

This aim of the article is to establish a model to discuss the reasons for changing the level of credit risk among the commercial banks of Bangladesh during the global financial crisis (GFC). Credit risk has been remaining as the essential and core risk in commercial banking activities. Multiple regression analysis is used to test the relationship among the level of credit risk as a dependent variable and financial crisis, other bank-level variables and macroeconomic variables. The causes of the GFC revealed not only systematic or structural imbalances but also the necessity to keep and strengthen the principles of credit risk management. We analyse the leading causes of the recent GFC. Moreover, the lessons that must be learnt from the weaknesses of credit risk management systems. Credit risk was found to respond to macroeconomic conditions, which indicate strong feedback effects from the banking system to the real economy. This article represents the analysis of the influence of the financial crisis on credit risk management in commercial banks and summarizes the challenges faced by banks for credit risk improvement. We hope that this reality creates new opportunities for managing credit risk in the future to increase this importance in the banks and the overall economy of Bangladesh.

scholarly journals The Impact of Audited Financial Statements on Credit Risk Assessment in the Banking System of Kosovo (Period 2014–2018)

2020 ◽  
Vol 8 (1) ◽  
pp. 119-128
Author(s):  
Albina Kalimashi ◽  
Yllka Ahmeti ◽  
Ardi Ahmeti
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Banking System ◽  
Financial Statements ◽  
Financial Statement ◽  
Credit Risk Management ◽  
Audit Process ◽  
Process Work ◽  
Survey Interviews ◽  
The Impact

AbstractThe main goal of the present research is to address the role and importance of audited financial statements in increasing the efficiency of credit risk management in the banking system of Kosovo. In addition, the research will help users understand the financial statement assurance process and the audit process work for a proper assessment of credit risk by banks. The research is treated in sections as below: the first section includes a review of literature (theoretical and empirical review) related to theoretical concepts regarding the importance and development of financial statement audit at financial institutions, in region and beyond. The second section includes a general overview of the relationship between audit of financial statements of clients that establish financial relations with banks and credit risk management. The third section presents the results of the survey and the confirmation of the formulated hypotheses. The last part of the paper presents conclusions and recommendations that have arisen from our study. The main method during our research has been the use of qualitative/quantitative analysis, which has been carried out during various techniques, among which the main ones are the survey interviews & internal observation of processes based on our own professional experience in the banking channels. The paper aspires to provide a better understanding of challenges in assuring qualitative accounting information for decision-making, as well as presents the basis for further study of this issue in the future. The results of the study aim at adding the value to regulatory bodies’ documents such as politics/strategies/instructions and also setting new rules in regard to credit risk management.

scholarly journals The Impact of Globalisation Towards Bank Performance in Malaysia

2021 ◽  
Vol 12 (1) ◽  
pp. 331
Author(s):  
Logasvathi Murugiah ◽  
Mugeshmani Supramaniam
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Banking System ◽  
Secondary Data ◽  
Macroeconomic Fluctuations ◽  
Bank Performance ◽  
Credit Risk Management ◽  
And Performance ◽  
Macroeconomic Determinants ◽  
The Impact

The purpose of this study is to shed some crucial light on the relationship between globalisation and performance of the banking system in Malaysia. This study uses a range of bank-characteristic determinants (internal factors), macroeconomic determinants (external factors) and three different dimensions of globalisation including economic globalisation, social globalisation and political globalisation to explain local commercial bank performance in Malaysia. This study uses regression analysis based on the secondary data for local commercial banks in Malaysia. The period for this secondary data is 10 years which is from the year 2008 till 2017. This study indicates that there is strong evidence stating both economic and politic globalisation have negatively significant effects on the bank performance in Malaysia. Meanwhile, social globalisation shows an insignificant result on this. As for bank characteristics variables, credit risk shows a negatively significant result towards bank performance in Malaysia while bank size shows a positive and significant result towards bank performance in Malaysia. Sole macroeconomic variable which is GDP does not show any significant result towards the bank performance in Malaysia. Therefore, central bank of Malaysia should give some incentive training for local bankers on how to adopt new supervision and risk management. This will give the local bankers some new knowledge to handle better risk management and directly boost the bank performance. Besides that, banks should develop their credit risk management to overcome any default loans and for better financial performances. Banks in Malaysia also need to expand their businesses as larger banks give a larger facility which directly boots the bank performance. It is also recommended for Malaysian banks to improve their forecasting of macroeconomic fluctuations in future to achieve greater efficiency levels.

Credit Risk Management in Royal Insurance Corporation of Bhutan Limited (RICBL) and Bhutan Insurance Limited (BIL): Comparative study

GIS Business ◽  
2019 ◽  
Vol 14 (6) ◽  
pp. 486-499
Author(s):  
Dr. Kriti Bhaswar Singh
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Management Practices ◽  
Research Work ◽  
Insurance Companies ◽  
Primary Data ◽  
Credit Risk Management ◽  
Regulatory Requirement ◽  
Banking Institution ◽  
Asset Quality

Credit risk is one of the main risks that affects banking as well as non-banking institution in an economy. The present research work aims to evaluate credit risk management practices of Royal Insurance Corporation of Bhutan Limited and Bhutan insurance limited, currently only two insurance companies in Bhutan.  Primary data using structured questionnaire is collected.  Analysis of the data reveals the key area which needs appraisal and modification to improve organization’s asset quality.   Among ten variables identified as obstacle in CRM tested, majority of obstacle in CRM is due to lack of risk awareness and stringent regulatory requirement which was perceived by the employees of both organizations.

scholarly journals Methodical approaches for reducing the credit risk

2021 ◽  
Vol 11/1 (-) ◽  
pp. 16-20
Author(s):  
Tetiana HORODETSKA ◽  
Kateryna ZAICHENKO ◽  
Alla IVASHCHENKO
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Banking System ◽  
Developed Countries ◽  
Legal Framework ◽  
Foreign Banks ◽  
Methodological Framework ◽  
Credit Risk Management ◽  
Management Tools ◽  
Starting Point

Banking is inevitably associated with risks. No matter what efforts the bank makes to minimize risks, they will always exist – the only question is to what extent. Lending operations are among the most profitable types of banking, but they are associated with a high level of risk. The instability of the economic situation in the country, the imperfection of the legal framework in this area necessitate a detailed study of the problems of minimizing credit risks. It should be noted that the choice of methods of credit risk management in the bank is quite relevant today. Credit risk management is the most important task of any bank, and choosing the right method of credit risk management will increase the stability, reliability and competitiveness of the banking system, which will positively affect the overall economic condition of the country. Credit risk is the oldest in the system of banking risks and occupies a prominent place. It is necessary to work out an effective system of using the tools recognized by the world banking community to minimize risks, given the possibility of their transfer from the bank to investors. The starting point in the development of the latest risk management tools of the bank should be the creation of a regulatory framework that will regulate this process. It is necessary to improve the existing methodological framework and develop a new methodological framework for credit risk management of the bank, concentrating the advantages of existing assessment methods, create a single method of assessing the borrower's creditworthiness, not to mention a certain algorithm for banks to form credit procedures. It is necessary to adopt the experience of foreign banks in credit risk management. The experience of foreign banks in developed countries, based on a detailed study of all credit procedures, multifactor analysis of the creditworthiness of potential borrowers.

Sign in / Sign up

Export Citation Format

Share Document