Credit Risk Management Of Banks Research Articles

Innovative Application of Artificial Intelligence Technology in Bank Credit Risk Management

With the rapid growth of technology, especially the widespread application of artificial intelligence (AI) technology, the risk management level of commercial banks is constantly reaching new heights. In the current wave of digitalization, AI has become a key driving force for the strategic transformation of financial institutions, especially the banking industry. For commercial banks, the stability and safety of asset quality are crucial, which directly relates to the long-term stable growth of the bank. Among them, credit risk management is particularly core because it involves the flow of a large amount of funds and the accuracy of credit decisions. Therefore, establishing a scientific and effective credit risk decision-making mechanism is of great strategic significance for commercial banks. In this context, the innovative application of AI technology has brought revolutionary changes to bank credit risk management. Through deep learning and big data analysis, AI can accurately evaluate the credit status of borrowers, timely identify potential risks, and provide banks with more accurate and comprehensive credit decision support. At the same time, AI can also achieve real-time monitoring and early warning, helping banks intervene before risks occur and reduce losses.

Research on Credit Risk Measurement and Management of Commercial Banks in China

This comprehensive study explores the sophisticated landscape of credit risk measurement and management within the commercial banking sector of China, a critical component in maintaining the resilience and stability of its burgeoning financial system. As China's economy continues to integrate with the global market, its banking sector faces escalating credit risk challenges, necessitating advanced and effective management strategies. This paper critically examines the existing methodologies for measuring credit risk, including both traditional approaches and modern innovations that leverage big data and artificial intelligence, assessing their applicability and efficiency in the Chinese context. Moreover, we delve into the multifaceted strategies employed by Chinese commercial banks to manage credit risk, focusing on the integration of regulatory frameworks, technological advancements, and best practices in risk management. Through a methodical review of literature and case studies of prominent Chinese banks, this study identifies key trends, challenges, and opportunities in credit risk management. We evaluate the effectiveness of current practices and propose a set of strategic recommendations aimed at enhancing the robustness of credit risk management systems. These include adopting a more holistic approach to risk assessment, leveraging technology to predict and mitigate risk, and fostering a culture of risk awareness and compliance.

Assessment of credit risk management practice in Dashen Bank

Financial stress is affecting all types of businesses across industries, but it particularly affects banks because they are a major source of capital and taking risk is an essential and unavoidable part of the banking business. Indeed, taking risk is embedded with reward, and financial crises have become a serious problem for the world in recent years. These papers evaluate Dashen Bank's approach to credit risk management. This study's primary objective is to evaluate Dashen Bank's credit risk management practices and determine how they are managed. Its primary focus is on credit evaluation in Dashen Bank. The researcher used descriptive research design, distributed questionnaires to officers. In addition to this the researchers used in- depth interview with management bodies. Both primary and secondary data collection method were used, census method were used, the study findings indicate that the bank doesn’t provide enough training for employees, the offsite follow up method placed by the bank is not successful, the credit risk management of the bank is weak also the credit collection system is not effective are among the main findings. The researcher suggest that the bank should provide strong and consecutive training for the employee, better follow up mechanism should apply new procedure should put in place to assess the capacity the client who need the long term loan.

CREDIT RISK MANAGEMENT OF “HALYK BANK” JSC: PROBLEMS AND SOLUTIONS

The purpose of the research work is to reveal the essence of the credit risk system, study the causes of its occurrence, and conduct a detailed analysis of the loan portfolio and credit risk management methods on the example of the commercial bank "Halyk Bank of the Republic of Kazakhstan" JSC. The authors analyze the loan portfolio of the bank using CAMELS, Z - score methods and build a regression analysis using R-studio, identify the main problems in credit risk management in a commercial bank and propose some solutions. In this article such problems in credit risk management as incomplete credit risk assessment, weak credit risk monitoring, insufficient collateral assessment, improper risk diversification, insufficient credit risk management policy are identified, and several solutions and methods for their improvement are proposed. The informational approach to solving the set goals is formed based on existing scientific research, published periodicals, scientific articles and financial statements of the bank, and its statistical data is used as material for writing a research paper.

Credit scoring and risk management in islamic banking: the case of Al Etihad Credit Bureau

This current research aims to assess the performance of Al Etihad Credit Bureau (AECB) operating in the United Arab Emirates (U.A.E.) in reducing credit risk in the Islamic banking model. The research aims to clarify the effects of credit scores on credit risk management in Islamic banks and the extent of adopting Islamic banks of these ratings when evaluating the borrowers. The study was done based on a primary qualitative research method where six top managers from AECB and nine managers from UAE’s Islamic banks who are involved with credits within the bank were interviewed using a structured interviews approach. It was found that Islamic banks perceive AECB services and products as useful for credit scoring and risk management as a supplement to their internal subjective rules and guides. AECB applies the same rating across banks and financial institutions in the UAE. The study has implications for Islamic banks, AECB, and financial policymakers in the UAE.

The Impact of Non-Performing Loans Ratio on Banking Profitability in the Albanian Banking System

Most of the studies have determined credit risk as the biggest risk among all other risks with a direct impact on the financial performance of a bank. The main objective of any bank, like any business unit, is to maximize shareholder value, so we considered it important to treat the impact of one of the most important bank’s risks on its profitability. Bank profitability and the non - performing loans ratio (NPLR) are the two main concepts in our study. This study aims to investigate the relationship and the stability over time of this relationship between the non - performing loans as the main indicator of credit risk management and profitability of commercial banks in Albania. The linear regression model is used to test the hypothesis raised in the study which tests the relationship that exists between the credit risk management indicator and bank profitability indicators. NPLR is taken as a representative indicator of credit risk management and ROE (return on equity) and ROA (return on assets) are taken as representative indicators of bank profitability. The statistical analysis in the study showed a negative impact of the NPLR indicator on the two indicators of bank profitability in our country. The findings of our study constitute a valuable contribution to banks and policy makers because a strong banking system motivates the financial stability of a country and increases the elasticity of economies to face economic crises. To conduct the study, we faced difficulties and challenges in finding a long time series of data for all the indicators taken in the study for each of the commercial banks operating in Albania. Although we were not able to provide the data for each commercial bank, we overcame this difficulty by taking the total data from the official website of the Bank of Albania. Taking into consideration that the banking history in Albania is relatively short we managed to find data for an 8-year study period which we used in our study.

Credit Risk Management and Deposit Money Banks’ Performance in Nigeria

This study examined the relationship between credit risk management and performance of deposit money banks in Nigeria. It was mainly conceived to unravel the causes of the incessant loan delinquencies and its resultant effect on the performance of deposit money banks in Nigeria, despite the various credit policies used by the monetary authorities to curtail them. To achieve this study, data for empirical analysis were sourced from the Nigerian deposit insurance cooperation spanning from 1990 to 2020. Error Correction Mechanism was employed to estimate the various models specified. It was found among others that non-performing loans (credit risks) exert significant impact on bank performance within the period of the study, while average liquidity ratio insignificantly relates to bank performance within same period. In the light of the above findings, the researchers recommend among others that the monetary authorities should intensify their regulatory as well as their supervisory role as it concerns the reduction of the volume of bad loans granted by banking system in Nigeria. Also, that deposit money banks should adopt a workable credit policy to forestall delinquent loans.

Research on Credit Risk Contagion of Commercial Banks Based on Copula Model

Research on the credit risk contagion effect of commercial banks is a key issue in credit risk management of commercial banks. This paper constructs a measurement framework for the credit risk contagion effect of commercial banks based on the Copula function theory. On the basis of selecting the appropriate Copula function and measuring specific parameters, taking Bank of China and Industrial and Commercial Bank of China as examples, the tail correlation coefficient was used to measure the credit risk contagion effect of the two banks, and relevant conclusions were drawn.

CREDIT RISK MANAGEMENT OF A COMMERCIAL BANK: PROBLEMS AND SOLUTIONS (ON THE EXAMPLE OF JSC “HALYK BANK”)

CREDIT RISK MANAGEMENT OF A COMMERCIAL BANK: PROBLEMS AND SOLUTIONS (ON THE EXAMPLE OF JSC “HALYK BANK”)

Управление кредитным риском коммерческого банка

In the main activities currently carried out by commercial banks, a significant place is given to the system of tools that is created and operates to manage credit risks. The importance of this system increases in the context of the development of the financial crisis, as well as in the fierce competition that arises between banks with a decrease in the profitability of their main activities. Among other things, credit risks themselves are the cause of a large number of various problems that impede the development and receipt of sufficient profits for credit institutions. 
 This article is devoted to various issues that, to one degree or another, relate to the credit risk management of commercial banks. The article analyzes the main reasons for the growth of risks, reveals the models by which credit risk can be assessed, and defines the goals pursued in the effective management of credit risks.

Credit Risk Management of Commercial Banks in China

The banking sector has experienced significant growth since the reform and opening up and has also become aware of the transition from a single national banking system to the commercial banking system required by the market economy. However, the ability of China's commercial banks to develop further has been constrained by both internal and external forces. Due to the high non-performing assets and inadequate risk management in China's commercial banking sector, at the same time. It also hinders the development of the financial industry to some extent. Analyze the performance and factors that contribute to credit risk for China's commercial banks, as well as the current state of affairs and issues with credit risk management, in order to try and find a solution to the issue from the viewpoints of the financial system and credit management techniques. The main method used is to use theoretical analysis to discuss the problem of credit risk management, integrate theory with practice, and hope to provide reference for the improvement of bank credit risk management by systematically making in-depth and simple research on the credit risk situation of China's commercial banks.

The Role of Internal Audit in Credit Risk Management in Commercial Banks

This study focused on assessing the role of internal audit in credit risk management in commercial banks in Kosovo. Methodology: The methodology used was quantitative, involving data collection through a structured questionnaire for internal auditors and bank loan analysts in Kosovo. The survey aimed to gather information about their practices, adherence to Institute of Internal Auditors standards, and the organization’s credit risk management structure and responsibilities. The Chi-Square test was applied to test the hypotheses. Study Findings: Internal audit affects the reduction in credit risk and the definition of existing credit policies. Also, a positive relationship was found between bank size and the approach used in auditing, and the organisation of credit policies and credit risk management in commercial banks in Kosovo. Originality: Through this scientific paper we can present real and consistent results regarding the role of internal audit in credit risk management in commercial banks in Kosovo. Extracting data from the questionnaire and adhering to international standards on auditing leaves room to draw competent conclusions and recommendations in this area.

Methods and instruments of credit risk management in banks

Methods and instruments of credit risk management in banks

EFFECT OF CREDIT RISK MANAGEMENT ON THE PROFITABILITY OF NIGERIAN BANKS

This study investigated the effect of credit risk management on the profitability of Nigerian banks from 2006-2020. Three banks were sampled (First Bank Nig Plc (FBN), Zenith Bank Plc (ZBN) and First City Monument Bank Plc (FCMB)). The study specifically determined the effect of non-performing loan to total loan ratio (NPR), non-performing loan to total deposit ratio (NDR), capital adequacy ratio (CAR), leverage ratio (LEV) and firm size (FSZ) on profitability of banks measured by Return On Assets (ROA) and Return On Equity (ROE). The study utilized secondary data sourced from annual reports and accounts of the selected banks for the period of the research work. The study employed multiple regression of OLS (Ordinary Least Square) and estimation obtained from E-views version 9 to determine the statistical relationship between credit risk management and profitability of banks in Nigeria. The finding revealed a positive insignificant relationship between NLR and profitability of banks, CAR and FSZ showed a negative insignificant relationship with profitability, LEV revealed a positive significant relationship in only ROE of Zenith Bank and First City Monument Bank while NDR revealed a negative insignificant relationship in First Bank and Zenith Bank only. Based on the above findings, this study recommended that the Central Bank of Nigeria, for policy purposes should frequently assess the lending habit of banks in Nigeria

Credit risk management in commercial banks

Development of the banking sector in Kazakhstan is characterized by a rapid pace. This growth is combined with increased competition, access to foreign markets, and the birth of new banking products. Most banking services fall on credit activities. In this regard, it is relevant to build an effective risk management of the loan portfolio. The purpose of the study is to develop proposals for improving the management of credit risks in the banking sector. The research methodology is based on the use of such methods as generalization, statistical methods, comparative analysis and statistical method. The authors analyzed the loan portfolio of the banking segment and based on this, conclusions and suggestions were made to improve the quality of lending. It is noted that over the past few years there has been a tendency to increase loans to individuals in the structure of the loan portfolio. The article outlines a number of proposals aimed at improving and enhancing the quality of credit risk management in the current economic conditions.

An Analysis of Bank Lending Practices and Credit Risk Management in the Economic Development of Nigeria

An Analysis of Bank Lending Practices and Credit Risk Management in the Economic Development of Nigeria

An Analysis of Bank Lending Practices and Credit Risk Management in the Economic Development of Nigeria

An Analysis of Bank Lending Practices and Credit Risk Management in the Economic Development of Nigeria

The impact of risk governance structure on bank risk management effectiveness: evidence from ASEAN countries

This study analyzes the effectiveness of bank risk management in ASEAN countries and examines the specific role of risk governance in enhancing a bank's risk management effectiveness. Our results show that the risk management effectiveness of banks in ASEAN countries is low. Furthermore, by focusing on the insolvency risk, credit risk, and operational risk management of banks in ASEAN countries, the dynamic panel models using the two-step GMM method provide evidence that risk governance structure and its effectiveness positively correlate with risk management effectiveness in banks. Based on our findings, the regulators can establish the guidelines related to risk governance to manage a bank's risk management activities and maintain bank stability.

Are European commercial banks more profitable than cooperative banks? Evidence from a low interest rate environment

AbstractOur aim is to compare empirically the profitability of European cooperative and commercial banks in a low interest rate environment. We employ dynamic panel data methods on a data set of nearly 1000 banks from 11 European countries where both ownership structures compete on the same market. We observed different banking strategies during the 2009–2015 period, when market interest rates reached an all‐time low. Our analysis produced four main conclusions. First, we find that commercial banks maintain superior profitability over cooperative banks in an environment of low interest rates. Second, commercial banks unjustifiably decreased their loan loss provisioning in a low interest rate environment in order to maintain their profitability. This trend is not present in cooperative banks. Third, decreased provisioning is present mainly in smaller institutions. Fourth, cooperative banks are significantly more stable than commercial banks in terms of their Z‐score in a low interest rate environment. This finding is in line with existing findings during normal interest rates. In addition, the Z‐score of cooperative banks increased during the observation period, whereas the Z‐score of commercial banks remained stable. Our findings survive a battery of robustness checks. Our results also show differences in the strategies and priorities of both competing ownership types in a low interest rate environment: commercial banks focus on maintaining their profitability by decreasing loan loss provisions, whereas cooperative banks seek to increase their stability. Therefore, regulators pursuing stability in a low interest rate environment should focus on the credit risk management of small commercial banks.

Credit Risk Early Warning of Small and Medium-Sized Enterprises Based on Blockchain Trusted Data

Small and medium-sized enterprises (SMEs) are now growing rapidly and playing an important role in the development of the national economy. As the economy grows, the contradiction between the credit risk of SMEs and the credit risk early warning mechanism of traditional supply chain financing has become increasingly important. In response to the issues of a single source of business information, the high investment cost of the existing early risk early warning mechanism, etc., from a commercial bank credit risk management perspective, this paper proposes to build an SMEs credit risk early warning system based on reliable blockchain data. The reliability of the data obtained is assessed utilising a hierarchical analysis and a vague overall judgement method. The results show that the use of blockchain technology can enhance the credibility and accuracy of the data, which provides a data guarantee for more rapid risk alert.