credit management thesis

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INVESTIGATING CREDIT RISK MANAGEMENT (CRM) STRATEGIES AMONG THE ZAMBIAN FINANCIAL INSTITUTIONS (BANKS)

The core business of the banking sector is credit provision. This is lifeline of the banking business system in that it is where its revenue and profit stream from, however, a dilemma comes in due to credit risk. Credit risk is so high that it costs many financial institutions millions of Kwacha in bad debt. Many financial institutions have continued providing credit even to those already in debt. This calls for prudent credit risk management strategies. This study attempted to investigate the credit risk management strategies employed by Zambian financial institutions. The findings were that credit risk management strategies were not uniform among the financial institutions. The data from the financial institutions found that risk mitigation, credit reminder, and guide line for loan procedure were the strategies used by the financial institutions to manage credit risk. Other strategies include credit criteria, diversification, training of loan officers, credit culture and loan recuperation. Furthermore, it was found that guidelines for effective credit risk management were not properly followed as there was compromise on the subject matter. Therefore, it was revealed that there would be need for effective monitoring and supervision if credit risk management were to be implemented in an effective and sound way. To achieve this, new brand financial econometric model was proposed.

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The study examined the relationship between Credit Risk Management Practices and Loan Performance of Commercial Banks in Mbarara City. The study covered 19 commercial banks. Method: A correlational design was used to establish the relationship between different credit risk management practices and Loan Performance in selected commercial banks in the city. The study used a structured questionnaire to collect numerical data from the credit staff and management of 19 commercial banks. Correlation and regression tests to analyze the relationships and effects of Credit risk management and Loan Performance of commercial banks in Mbarara city Findings: The study found a significant relationship between credit risk identification and loan performance; credit risk assessment and loan performance; credit risk monitoring and loan performance; and credit risk control and loan performance. The study also found that some commercial banks did not have experts to accurately predict credit risks nor evaluate the consequences of the decisions taken by loan officers. Implication: Banks should source experts who can analyze and predict risks and evaluate their consequences on the bank. The bank should adopt the tool of 5cs of credit management, with this it will develop a good loan book that shall lead to good loan performance. Limitations: We still don't know clients' perceptions of the different credit risk management practices. Therefore, a qualitative study to assess clients' perception of the credit management practices in commercial banks should be conducted.

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Rowland Seyram

In recent times, banks and other financial institutions that lend money to customers have placed a high priority on credit risk management. To manage credit risk, banks employ customer evaluation systems, loan size restrictions, credit checks, flexible loan repayment plans, and fines Hence, the present study focuses on the credit risk management practices used in banks, to identify the internal control measures used in mitigating credit risk in banks and to examine the challenges faced in implementing credit risk management practices. The Ordinal Logistic Regression (OLR) was used to identify the relationships between the response variables, e.g. management support, credit risk identification, internal control measuers and credit risk management surveys. The independent variables were calculated on an ordered, 5-point Linear scale for the responding participants. In this study, log lit function was chosen, that demonstrated the model appropriateness. One of the main finding is that in banks, credit management risk is reduced when managers implement and adhere to responsible credit risk management procedures, viable client appraisal credit management system, regular credit checks, flexible credit repayment systems to encourage and improve loan repayment, were highly significant with the respondents' positive initiative amidst credit risk management practices in banks.

IJMSBR Open Access Journal

Purpose: The purpose of this paper was to have an insight into policies and strategy formulation of credit risk management in Ghana. Commercial banks play a critical role to emerging or developing economics like Ghana where borrowers have no or limited access to capital markets Design/methodology/approach: The study adopted both qualitative (case study) and quantitative methods respectively. Banks were selected to gather data, which was acquired from answers obtained from our administered questionnaires. The population of the survey constituted the management and non-management staff and customers of Ecobank (EBG), Ghana Commercial Bank (GCB) and Stanbic Bank. Findings: The data gathered for the study were analyzed using correlation. Results of the study showed that there are high positive correlation between the constructs of credit risk management, its policies and strategy formulation. Keywords: credit risk management, credit risk policies, credit risk strategies and Ghanaian banking industry.

Research Journal of Finance and Accounting

Michael Kwabena

Texila International Journal of Management

Texila International Journal

Banks are very important in achieving the Sustainable Development Goals (SDGs). They provide financial support to enterprises to increase production and boost economic development. It is necessary for banks to be engaged in profitable activities and also have the ability to grow and survive in the industry. Sustaining growth and survival of banks in Ghana requires efficient strategic, tactical and operational management of credit risk in the banking sector. Credit risk has the potential to negatively affect the survival of banks. The study set out to assess the credit risk management strategy in the banking sector using Cal Bank Limited as a case study. Extensive literature on credit risk management was reviewed. Quantitative approach was used in the study. Data was collected from 4 Cal Bank branches (Graphic Road, Achimota, Derby Avenue and Ring Road Central) in Accra using likert scale questionnaires and open-ended questionnaires and the data were statistically analysed using Statistical Package for the Social Sciences (SPSS). The study indicated that the banks have credit risk management procedures in place. The respondents indicated that credit risk management is an important strategic management tool employed by banks. However, risk assessments are not frequently carried out and qualified personnel to carry out effective risk monitoring are inadequate.

Nathaniel Obi

Financial risk in a banking organization is possibility that the outcome of an action or event could bring up adverse impacts. Such outcomes could either result in a direct loss of earnings / capital or may result in imposition of constraints on bank’s ability to meet its business objectives. The purpose of this study was to investigate the effect of credit risk management techniques on the performance of unsecured bank loans by commercial banks in Kenya.

International Journal of Advanced Research (IJAR)

IJAR Indexing

This study tried to asses factors that affect credit risk management practices of some selected private commerial banks in Ethiopia. In light of this, the study identified some dimensions of service quality such as , credit granting process, credit risk measurment and monitoring process, market risk, operational risk, legal risk, the establishment of credit risk environment. So as to come up with the desired results data were collected from four private commercial banks, namely; Oromia, Birhan, Debub global and Anbessa. A total of 106 respondents participated in this study selected purposively. In the study both descriptive and explanatory designs were used. Frequency percentage, mean, standard deviation, pearson correlation cofficient as well as regression were used for data analysis process using SPSS version 20. The result of correlation cofficient showed that all variables are statistically significant and positively correlated with the credit risk management practices of the mentioned private banks. Hence, the banks credit risk management practices were significantly affected by lack of appropriate credit environment, followed by challenges of credit appraisal measurment and monitoring, lack of market risk analysis , operational risk and challenges of sound credit granting process. Legality of risk assessment is found to have a negative relation and insignificant impact on credit risk management practices of the mentioned banks. As per the regression cofficient which vividly shows the effect of the independent variables on dependent variables , lack of appropriate credit risk environment (beta = .993, t = 9.612, p = < .000), followed by lack of operational risk management (beta = .713, t =1.003, p = .318) and lack of credit measurement and monitoring process (beta =.610, t= -571, p < .569) respectively and significantly affect credit risk management practices of the studied private banks. Having all this big crystals of truth in hand,the study gave some recommendations that the management body may need to take so as to come up with a more effective and efficient risk management practices.

International journal of business and social research

Simon Waithaka

Financial risk in a banking organization is possibility that the outcome of an action or event could bring up adverse impacts. Such outcomes could either result in a direct loss of earnings / capital or may result in imposition of constraints on bank’s ability to meet its business objectives. The purpose of this study was to investigate the effect of credit risk management techniques on the performance of unsecured bank loans by commercial banks in Kenya.

Open Access Publishing Group

This study sought to establish how various credit risk management practices affect performance of commercial banks in Nyeri County in Kenya. Even though commercial banks face several types of risks, credit risk stands out as the most severe. Credit risk is the possibility of loss to the lender on non-performing loans. Financial practice as well as theory provides a scientific process of credit risk management in financial institutions. However, lenders still face loan default and consequently this study sought to find out how those practices affect the performance of commercial banks in Nyeri County, Kenya. A census study was conducted where a population of 86 respondents was targeted comprising of branch managers, credit managers and credit officers. The findings of the study were that all commercial banks had a well written credit policy which is strictly and consistently followed. Only few commercial banks conduct a quantitative credit scoring model. In all banks, initial screening is done by credit officer and approval done at different levels depending on the amount. Majority of the banks check post borrowing activities of the borrower. In conclusion, credit risk management has an effect on loan performance amongst commercial banks. Thus, managers should evaluate more accurately the ability to pay back of a customer since the better the screening the better the performance of commercial banks.

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