scholarly journals FINANCIAL RISK MANAGEMENT STRATEGIES AND THE GROWTH OF MICROFINANCE SECTOR IN KENYA

2017 ◽  
Vol 2 (1) ◽  
pp. 23-53
Author(s):  
Dr. James Rurigi Njuguna ◽  
Prof. Roselyn Gakure ◽  
Dr. Anthony Gichuhi Waititu ◽  
Dr. Paul Katuse
Keyword(s):  
Risk Management ◽  
Financial Risk ◽  
Management Practices ◽  
Management Strategies ◽  
Credit Risk Management ◽  
Financial Risk Management ◽  
Risk Management Strategies ◽  
External Sources ◽  
Internal Sources ◽  
The Relationship

Purpose: The purpose of this study was to investigate how financial risk management strategies lead to growth of MFI sector in Kenya.Methodology: The study adopted a correlation survey research design. The population of this study was fifty seven (57) MFIs. The sampling frame was the list of MFIs provided in the AMFI website www.amfikenya.com. A sample of thirteen (17) MFIs was selected using the random sampling approach. A questionnaire and an interview schedule were the main data collection tools. Qualitative data was analyzed using content analysis whereas the quantitative data was analysed using Statistical Package for Social Sciences (SPSS) where descriptive and regression analysis were conducted to determine the relationship between enterprise risk management strategies and growth of MFIs.Findings: The findings indicated that MFIs had effective financial risk management strategies such as effective credit risk management practices, liquidity risk management practices, interest risk management practices and price risk management practices. In particular, MFIs took into consideration the conditions, characters, capacity, collateral and capital of borrowers. Strict debt collection practices were widely adopted by MFIs. In addition, the concept of Know Your Customer (KYC) policy, seem to have been adopted by MFIs. The relationship between financial risk management strategies and growth was positive and significant. It also shown that sources of funds for MFIs include external sources and internal sources and the most frequently used source of funds are bank loans. The use of banks loans may present various risk exposures to MFIs, the most significant being interest rate risk. However, the ability of MFIs to source funds from various sources indicates that MFIs can apply the pecking order by first exploiting internal sources of funds since they present a lower financial risks and then move on to external sources. However, despite the financial risk exposure accompanied by leverage from external sources, MFIs may also benefit as they may experience higher growth driven by the leverage. It was also found that MFIs had put in place a number of good practices that had emerged to promote responsible and inclusive lending. These include loan size limits, standardized (simple) loan terms, zero tolerance on delinquency, group-based lending. This finding implies that MFIs have put in place effective credit risk management policies which are part of an overall financial risk management strategy. The existence of effective financial risk management practices may have influenced the growth of MFIsUnique contribution to theory, practice and policy: The study recommends that the MFIs to continue practicing effective financial management practices as this would improve the growth of MFIs.

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 A stochastic dominance approach to financial risk management strategies

2015 ◽  
Vol 187 (2) ◽  
pp. 472-485 ◽  
Author(s):  
Chia-Lin Chang ◽  
Juan-Ángel Jiménez-Martín ◽  
Esfandiar Maasoumi ◽  
Teodosio Pérez-Amaral
Keyword(s):  
Risk Management ◽  
Stochastic Dominance ◽  
Financial Risk ◽  
Management Strategies ◽  
Financial Risk Management ◽  
Risk Management Strategies

The relationship between financial risk management and succession planning in family businesses

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
George Mihaylov ◽  
Ralf Zurbruegg
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
Succession Planning ◽  
Financial Risk ◽  
Management Practices ◽  
Critical Role ◽  
Family Businesses ◽  
Financial Risk Management ◽  
Content Type ◽  
The Relationship

PurposeThis article examines the relationship between financial risk management and succession planning in family businesses. Motivated by the Theory of Planned Behaviour, we hypothesize that the use of professional risk management practices is associated with an increased likelihood that businesses adopt professionalized approaches to succession planning. We then investigate if succession planning professionalization is, in turn, positively related to the financial performance of family businesses.Design/methodology/approachWe apply binary probit and ordered dependent variable regressions to unique data generated from a survey sample of Australian family businesses. To check the robustness of our results to potential endogeneity concerns we apply difference tests to propensity score matched sub-samples from our original cohort of respondents.FindingsThe results show that, in contrast to verbal or absent succession arrangements, formal written succession plans are both positively associated with the use of financial risk management practices and with superior financial performance in family businesses.Originality/valueOur arguments and findings suggest that active financial risk management provides a platform for planning succession in family businesses, and that this links with improved short-term financial performance. In light of the critical role that succession plays in ensuring long-term business sustainability, our findings provide important and novel insights into the conditions under which family businesses are most likely to use formal professionalized succession planning.

Global IT Risk Management Strategies

2008 ◽  
pp. 285-298 ◽  
Author(s):  
Chrisan Herrod
Keyword(s):  
Risk Management ◽  
Financial Risk ◽  
Best Practice ◽  
New Technologies ◽  
Management Strategies ◽  
Regulatory Compliance ◽  
It Risk Management ◽  
Reputational Risk ◽  
Risk Management Strategies ◽  
It Risk

This chapter describes why it is important for organizations to develop and implement an IT risk management function and use best practice risk assessment methodologies that provide a standard to measure and assess risk within organizations. Information technology risk management is a significant new function that can help companies achieve world class IT service. IT risk management includes regulatory compliance, information security, disaster recovery, and project risks. IT risk management should be part of a company’s risk management strategy on an equal footing with financial risk management and reputational risk management. As the complexity of IT infrastructures increases and as businesses continue to rely upon the Internet as the communication backbone for e-business, the associated risks increase. For these reasons, deciding upon and implementing a risk management process and a standard methodology will greatly reduce the risks associated with the introduction of new technologies that support the mission of the business.

Personal Financial Risk Management Practices among Households in Riyadh, Saudi Arabia

2020 ◽  
pp. 171-183
Author(s):  
Masahina Sarabdeen ◽  
Ann Largey ◽  
Noreha Halid ◽  
A.C. Muhammadu Kijas ◽  
Abad Alzuman
Keyword(s):  
Risk Management ◽  
Saudi Arabia ◽  
Financial Risk ◽  
Management Practices ◽  
Financial Risk Management
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