Empirical Examination for Operational and Credit Risk Perspective â A Case of Commercial Banks of Pakistan

Mehmood, Mian Saqib; Sheraz, Iram; Mehmood, Asif; Mujtaba, Bahaudin G.

doi:10.6007/ijarbss/v7-i6/2964

Cited by 4 publications

(6 citation statements)

References 8 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…These studies have concluded that credit risk increases with the growth of nonperforming loans. Ahmed et al (2011);Mehmood et al (2017) also found negative links, which are counterintuitive and contrary to our findings, and have concluded that non-performing loans do not affect credit risk.…”

Section: Analysis and Discussion Of Multiple Regression Collinearitie...contrasting

confidence: 99%

“…Köhler (2015) and Adusei (2015) found positive correlations and pointed out that the larger the size of the bank results in the greater credit risk. The opposite result, where the size of the banks has no significance and is negatively related to the credit risk, was found by Mehmood, Sheraz, Mehmood, and Mujtaba (2017) in their study of Pakistani banks. NPL -like other independent variables based on the results of the regression equation (see Table 11 shows that there is a positive relationship with credit risk positive correlation between non-performing loans and credit risk has also been found by Busch and Kick (2009); Afriyie (2013) and Alizadeh Janvisloo and Muhammad (2013).…”

Section: Analysis and Discussion Of Multiple Regression Collinearitie...mentioning

confidence: 78%

“…Similarly, a study by Gizaw et al (2015) when analysing the credit risk and profitability performance in the Ethiopian banking sector found that credit risk is negatively related to capital adequacy. On the other hand, Mehmood et al (2017) in their study found a positive relationship between credit risk and capital adequacy for commercial banks in Pakistan.…”

Section: Analysis and Discussion Of Multiple Regression Collinearitie...mentioning

confidence: 83%

See 2 more Smart Citations

The influence of internal factors on loan risk management - Case study commercial banks of Kosovo

Sahiti¹,

Sahiti

Yurtsever

et al. 2023

IJAEFA

View full text Add to dashboard Cite

The main purpose of this study is to empirically analyse key internal factors influencing loan risk management of Kosovo’s commercial banks. This research adopts parametric statistics and employs a multilinear regression model. The data used for the analysis covers 7 banks for the 12 years from 2008 to 2019. The dependent variable is credit risk measured by dividing total debt by total assets. The independent variables are the size of the bank, the ratio of non-performing loans, the capital adequacy ratio, the debt-to-capital ratio, and asset management. The hypotheses raised in this research were tested through the SPSS software package using quantitative methodology. The results obtained through multiple linear regressions have shown that credit risk is positively correlated and statistically significant with non-performing loans and debt-to-equity ratio and statistically significant and negatively correlated with bank size, capital adequacy, and asset management. Considering our results, it can be considered that Kosovo’s commercial banks have performed very well so far by assessing internal factors that impact credit risk. The findings of this research have direct practical implications for the banking sector in Kosovo regarding the credit risk management approach because it can be used further to enhance the effectiveness of using proper mechanisms and regulations to minimize credit risk exposure.

show abstract

Section: Analysis and Discussion Of Multiple Regression Collinearitie...contrasting

confidence: 99%

Section: Analysis and Discussion Of Multiple Regression Collinearitie...mentioning

confidence: 78%

Section: Analysis and Discussion Of Multiple Regression Collinearitie...mentioning

confidence: 83%

See 1 more Smart Citation

The influence of internal factors on loan risk management - Case study commercial banks of Kosovo

Sahiti¹,

Sahiti

Yurtsever

et al. 2023

IJAEFA

View full text Add to dashboard Cite

show abstract

“…The process of monitoring, estimating and assessing risk is called risk management. According to Mehmood, Sheraz, Mehmood, and Mujtaba (2017) risk is defined in financial terms as the chance that an outcome or investment's actual gain will defer from an expected outcome or return. Risk management is the practice of identifying potential loss or damage (risk) in advance, analyzing them and taking precautionary steps to reduce or curb the risk.…”

Section: Review Of Conceptsmentioning

confidence: 99%

“…Risk management is the practice of identifying potential loss or damage (risk) in advance, analyzing them and taking precautionary steps to reduce or curb the risk. According to Mehmood et al (2017) risk can be classified as non-financial (operating) risk and financial (credit, capital, and liquidity) risks.…”

Section: Review Of Conceptsmentioning

confidence: 99%

Risk Management and Shareholders’ Wealth Maximization

Ogundajo¹,

Adefisoye²,

Nwaobia³

2020

International Journal of Business, Economics and Management

View full text Add to dashboard Cite

Risks are fundamentally part of business operational models; it cannot be completely eliminated and if not efficiently managed could result to loss of value. Wealth creation could only take place when the prevailing financial risks in the banking sectors are identified and carefully handled. An expost-facto study of 100 firm-year observations was conducted using ten listed Deposit Money banks in Nigeria for a period of 10 years from 2009 to 2018. The results of the multiple regression analysis carried out revealed that risk management significantly affected shareholders' wealth of listed banks. Credit risk (NPLR) and operating efficiency risk (OPER) had significant negative effect on Market Value (MV) while capital risk and liquidity ratio (LQR) had significant positive effect on market value (MV). This study concluded that four elements of risk (credit risk, capital risk, operating risk, liquidity risk) significantly affected shareholders' wealth of listed banks in Nigeria. Therefore, the management of the Nigerian banks should ensure that non-performing loan ratio to total loan is kept at its minimum; ensure adequate liquid fund in meeting customers demand as when needed, engage competent hands where deemed necessary in their operations to mitigate operating efficiency risk and possess adequate capital ratio in accordance with CBN minimum capitalization ratio, if possible, beyond the minimum required by the regulatory bodies. Contribution/Originality: This study is one of the few studies which have examined the four elements of risk associated with banking industry, as it affects the wealth of the shareholders. The four risk elements considered were credit risk, operating risk, capital risk and liquidity risk.

show abstract

Credit Risk and Lending Performance of Commercial Banks in Kenya

Karanja¹

2022

Preprint

View full text Add to dashboard Cite

Credit risk poses substantial exposure both to the banks and the economy; a scenario evident in East Africa financial crises; this is in part owing to the fact that the banking sector is vital in any economy. The decline of profitability within the banking industry and financial losses can be attributed to credit exposures that went awry. This underscores the significance of the management of credit risk within the banking sector. While lending is profitable for the banks especially because of the interest paid on the amount borrowed, it also has disadvantages resulting from delays or default in loan repayments. This study was purposed to evaluate the credit risk on the lending performance of commercial banks in Kenya. A descriptive survey research design was employed while the target population for this study was employees of the 42 commercial banks in Kenya as at 1st January 2018. Purposive sampling was used to pick 42 credit managers and simple random sampling was invoked to determine the other 301 respondents from the target population of 1260 employees. Both structured and unstructured questions were used to collect primary data. Thereafter, data was analyzed using descriptive statistics including frequency distribution tables, measures of central tendency, and standard deviations. In addition, advanced statistical techniques including logistic regression analysis and Pearson correlation were used to establish relationships among variables and provide a description of the data. The results were then presented in tabular representations supplemented by relevant explanations. The results of the study revealed that the combined effect of credit risks positively influenced the lending performance of banks. The study concluded that credit risk activities significantly influenced the lending performance of commercial banks, and as a result, the operating capital of commercial banks had gone down to very low levels since lending is a source of income for the commercial banks and this has affected the performance of the entire banking sector. The study recommended that the Government of Kenya through the National Treasury and in collaboration with the Central Bank of Kenya and the Kenya Bankers’ Association should formulate policies that will help the commercial banks reduce the level of credit risks and improve the lending performance which was currently affected to a great extent.

show abstract

Empirical Examination for Operational and Credit Risk Perspective â A Case of Commercial Banks of Pakistan

Abstract: Abstract

Cited by 4 publications

References 8 publications

The influence of internal factors on loan risk management - Case study commercial banks of Kosovo

The influence of internal factors on loan risk management - Case study commercial banks of Kosovo

Risk Management and Shareholders’ Wealth Maximization

Credit Risk and Lending Performance of Commercial Banks in Kenya

Contact Info

Product

Resources

About

Empirical Examination for Operational and Credit Risk Perspective â A Case of Commercial Banks of Pakistan

Abstract: Abstract

Cited by 4 publications

References 8 publications

The influence of internal factors on loan risk management - Case study commercial banks of Kosovo

The influence of internal factors on loan risk management - Case study commercial banks of Kosovo

Risk Management and Shareholders’ Wealth Maximization

Credit Risk and Lending Performance of Commercial Banks in Kenya

Contact Info

Product

Resources

About

Empirical Examination for Operational and Credit Risk Perspective â A Case of Commercial Banks of Pakistan