AN OVERVIEW OF THE RISKS ASSOCIATED WITH BANK LENDING IN THE BANKING
An overview of risk associated with bank loading in the banking sector is a topic Chosen from the financial field.
The purpose of this research work is to identify the factors and effect of risk in the financial institutions with special reference to banks.
This research work will expose us to:
1. Find out the extent to which risk of lending constituted major problems.
2. find out the extent to which risk is associated with lending in the banking sector.
3. Find out the need for effective & efficient of risk in the growth of banks.
4. Find out the need for effective & efficient analysis of risk inherent in bank lending.
TABLE OF CONTENT
TABLE OF CONTENT.
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF PROBLEMS
1.3 PURPOSE/OBJECTIVE OF THE STUDY
1.4 RESARCH QUESTIONS
1.5 STATEMENT OF STUDY
1.6 SIGNIFICANCE OF STUDY
1.7 SCOPE, LIMITATIONS AND DELIMITATIONS
1.8 DEFINITIONE OF TERMS.
2.0 LITERATURE REVIEW
2.1 NATURE AND DIMENSIONS OF RISKS
2.2 FUNCTIONAL DEFINITION OF RISK
2.3 RISKS MANAGEMENT
2.3.1 RATIONAL FOR BANK WODE RISK MAMAGEMENT
2.3.2 TYPES OF BANK RISKS
2.4 RISK AND UNCERTAINLY
2.5 BANKS & RISK OF LENDING
2.5.1 THE CONCEPT OF CREDIT RISK
2.5.2 THE CREDIT RISK IDENTIFIACTION
2.5.3 CREDIT RISK ASSESSEMENT
2.5.4 CLASSIFIACTION & HANDLING OF RISKS.
2.6 FRAMEWORK FOR LENDING
2.6.1 LENDING PRINCILES
3.0 RESEARCH DESIGN AND LETHODOLOGY
3.1 RESEARCH DESIGN
3.2 AREA OF STUDY
3.4 SAMPLE AND SAMPLING TECHNIQUE
3.5 INSTRUMENT FOR DATA COLLECTION
3.6 METHODS OF DATA PRESENTATION
3.7 TECHNIQUE OF DATA ANALYSIS
4.0 DATA PRESENTATION AND ANALYSIS
4.1 DESIGNS AND FEATURES OF FINANCIAL REPORTS IN THE
4.2 ASSESSMENT OF INSTITUTIONAL STRUCTURE FOR RISKS
4.3 PRSENTATION OF DATA ANALYSIS
4.4 TEST OF HYPOTHESIS
FINDINGS, RECOMMENDATION AND CONCLUSION
5.0 SUMMARY OF FINDINGS
Risk as we know it, is an action taken with varied and unlimited certainty, when applied in the course of lending several options and end points are obtained.
Why do you lent?
As bankers we lend to fill the gap created from those having deficit to those having surplus, but at a profit.
In the course of lending, several things have to be noted, investigated, amitiorated and controlled, ranging from industry risk, credit risk, price risk, micro economic instability, fluctuation in govt policy, globalization etc.
In chapter one of this study, we shall attempt to introduce the concept of risk and illusidate on its core and periferials.
Chapter two comprise of the literature review whereby we shall by to harmonize past and present data/events as regards to risk as expanciated by several leading authors and authorities.
Chapter three comprises of the made made at which the questionnaires were distributed, oral & written interview carried out and mode at which information were sourced.
Chapter four is a theoretical frame work, going by the result of three and backed up by literature review of two, we obtain an inmate theory as per risk with regards to the best possible method, technique, criteria, methodology of handling risk and we now apply such in the practical sense or various credit request made in the banking sector.
Chapter five borders on the outcome of the application of the theory, the gliches observed and the recommended solutions towards a best possible and in order to safeguard bank fund and equally not render ourselves (i.e the credit officers) liable for professional negligence\incompetence, which may have dial consequences.
1.1 BACHGROUND OF THE STUDY
Banking can be aptly described as a high-risk business. For this reason a lot of attention is directed at risk management in banking. The need of such emphasis on risk management becomes even more urgent as banks go apple with large volumes of non-performing assets. This thinking is shared by Rose (1987:54), who points out that while the 1950s focused on techniques for the management of banks assets and the 1960s and 1970s emphasized liability management banking in the eighties was concerned with risk-how to measure risk and how to control risk for the betterment of banks and its customers. This view of risk remains true and on issue for bank management in the lending functions.
It is obvious that the subject matter of “risk” assume considerable importance in determing business success and failures, especially in banking of course, the conventional approach to appreciating that fact in financial management is often linked to inverse between the plausible business outcomes, a high risk heads to more profit value and vice versa.
In banking strictly speaking, we can extend this argument to imply that the more a bank achieves and retains liquidity (less risk) the less it gains in profitability (less returns).
Unfortunately, Uncertainty-another variable also affects business outcomes is not easily understood as in the case of ‘risk” yet we must reckon with the decisive dicey and irrational subjective chances, what do we exactly mean by the term “risk” and “uncertainty”? The answer to these questions forms the basis for the discussion of the overview, which comprise of impact and implications of the term for bank management.