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This paper aims to explore the interplay between risk management and control systems in banks, specifically investigating the managerial intentions underlying the design of management control systems.

This study is based on 31 interviews with personnel of two banks in a European country.

The main finding is that belief systems drive the interplay between risk management and control systems in the studied banks. In several instances, belief systems and boundary systems were operating complementarily. Cross-case analyses of the two banks demonstrate that risk management (i.e. the Basel II Accord) replaced established operating procedures for loan origination and portfolio monitoring at the first bank, whereas senior managers suppressed Basel II to maintain established loan origination and portfolio monitoring procedures at the second one.

This is one of very few studies investigating the interplay between risk management and control systems in banks.

The study of credit risk has been of the utmost importance when it comes to measuring the soundness and stability of the banking system. Due to the growing importance of Islamic banking system, a fierce competition between Islamic and conventional banks have started to emerge which in turn is impacting credit riskiness of both banking system.

Using the system GMM technique on 283 conventional banks and 60 Islamic banks for the period of 2006–2017, this paper explores the important impact of size and competition on the credit risk in 15 dual banking economies.

The authors found that as bank competition increases credit risk seems to be reduced. On the size effect, the authors found that big Islamic banks are less risky than big conventional banks whereas small Islamic banks are riskier than small conventional banks. The results are robust for different panel data estimation models and sub-samples of different size groups. The findings of this paper provide important insights into the competition-credit risk nexus in the dual banking system.

The paper is specifically focused on credit risk in dual banking environment and tries to fill the gap in the literature by studying (1) do the Islamic and conventional banks exhibit a different level of credit risk; (2) does competition in the banking system impact the credit risk of Islamic and conventional banks and finally (3) do the big and small banks exhibit similar levels of credit risk.

THE Report of the Donovan Commission recommended, in paragraph 182, that there should be procedural agreements between companies and the recognized trade unions. It was led to this conclusion because, from the evidence presented to it, the imprecise nature of the relationship between the two sides was often a major source of poor industrial relations. A list of the requirements that such agreements should meet was included in the paragraph.

Due to its high leverage nature, a bank suffers vitally from the credit risk it inherently bears. As a result, managing credit is the ultimate responsibility of a bank. In this chapter, we examine how efficiently banks manage their credit risk via a powerful tool used widely in the decision/management science area called data envelopment analysis (DEA). Among various existing versions, our DEA is a two-stage, dynamic model that captures how each bank performs relative to its peer banks in terms of value creation and credit risk control. Using data from the largest 22 banks in the United States over the period of 1996 till 2013, we have identified leading banks such as First Bank systems and Bank of New York Mellon before and after mergers and acquisitions, respectively. With the goal of preventing financial crises such as the one that occurred in 2008, a conceptual model of credit risk reduction and management (CRR&M) is proposed in the final section of this study. Discussions on strategy formulations at both the individual bank level and the national level are provided. With the help of our two-stage DEA-based decision support systems and CRR&M-driven strategies, policy/decision-makers in a banking sector can identify improvement opportunities regarding value creation and risk mitigation. The effective tool and procedures presented in this work will help banks worldwide manage the unknown and become more resilient to potential credit crises in the 21st century.

The study aims to assess credit risk management practices within financial institutions in Ghana. Specifically, the study compares credit risk management practices of listed banks in Ghana with Basel II (1999).

The analysis is based on data gathered from varied sources, namely, use of questionnaires, analysis of internal credit policies and procedure manuals and semi-structured interviews and discussions with credit risk managers of the selected banks in May 2007 and October 2014.

Overall, the credit risk management practices within listed banks in Ghana are in line with sound practices. The only dissimilarity, however, is the role of the board of directors in defining acceptable types of loans and maximum maturities for the various types of loans. The listed banks in Ghana are also exposed to credit risks associated with granting both corporate and small business commercial loans and the use of collaterals to mitigate their credit risk exposures.

Banks in Ghana should consider developing the skills of all their personnel and appropriately motivating those involved in the credit risk management processes to ensure that they carry out this process efficiently.

Research into credit risk management in the banking industry from the Ghanaian perspective remains scant. This study is, therefore, timely, and its findings are invaluable for the efficient management of credit risk in the banking industry. This study provides policy recommendations which will enhance shareholder value and, in this way, contribute to greater stability in the banking sector in developing countries, in particular.

The purpose of this paper is to examine the impact of credit risk components on the performance of credit risk management and the growth in non-performing assets (NPAs) of commercial banks in India.

The data are obtained from primary and secondary sources. The primary data are collected by administering questionnaire among risk managers of Indian banks. The secondary data on NPAs of Indian banks are from annual reports and Prowess database compiled by the Centre for Monitoring Indian Economy. Multiple linear regression is used to estimate the models for the study.

The results suggest that the identification of credit risk significantly affects the credit risk performance. The results are robust as credit risk identification is negatively related to annual growth in NPAs or loans. There is evidence in support of a priori expectation of better credit risk performance of private banks compared to that of government banks.

The study has implications for Indian banks suffering from a high level of losses due to bad loans. In addition, it will have implications for the implementation of new Basel Accord norms (Basel III) by the Reserve Bank of India.

The high and rising level of NPAs will have adverse consequences for credit flow in the economy in the absence of appropriate intervention by government and central bank in the form of changes in institutional and regulatory infrastructure. The problems in banking and financial services sector will lead to lower industrial and aggregate economic growth, and lower (or negative) growth in employment.

There is little evidence on credit risk management practices of Indian banks, and its relationship with credit risk performance and NPA growth. The need for an effective risk management system to manage credit risk assumes importance and urgency in the context of high and rising NPAs of Indian banks, and the consequences for the Indian economy.

THERE is much criticism of the Government's avowed intention to hive off nationalised industries, either wholly or piecemeal.

This paper aims to deal with the perceptions of banks’ managers about some criteria for assessing creditworthiness related to firms and how these criteria affect non-performing loans (NPLs). The paper wants to respond to the following research question: “Which criteria influence the magnitude of NPLs?” The evidence is based on the improvement of credit quality in the Italian banking system, which the authors study in aggregate and size-specific analyses, creating two subsamples (large and small banks).

The methodology used was a mixed method approach. The values of the variables were quantified according to the information derived from Thomson Reuters (Eikon, Datastream), the financial reporting of the banks and questionnaires directly administered to the bank managers.

This research about loans selection criteria provides useful indications for “The Basel Framework”. The results show that managers of the large banks are improving the approach of allocating the loans; the managers of the small banks are getting worse in the period 2006-2016. Therefore, it should be valuable to build a new standard about qualitative and quantitative criteria to recognize credit risk. In particular, these criteria could be adopted to reduce NPLs, and they should be different in small banks and large banks.

The study is part of empirical research investigating the causes of the significant increase in NPLs in the Italian banking system in 2006-2016. Most research interprets the increase in NPLs in the Italian banking system only as an effect of the crisis in the Italian entrepreneurial system. This research offers a different interpretation of the problem, interpreting the phenomenon as a delay of the banking system in investing in an effective information criterion.

Of all the financial facilities and services that have appeared in the UK in the past ten years or so, probably the least understood is factoring. Pure debt factoring does not attract any supply of finance but is a service. The service is that of keeping the client company's sales ledgers, collecting remittances, providing credit control (deciding the level of credit the client's customers should receive) and guaranteeing payment of debtors' balances if kept within the limit suggested by the factor. It can be seen, therefore, that by using the services of a factoring company it is transferring, for a fee, the responsibility for the control of the investment in trade debtors.

The authors aim to investigate what influences a Farm Credit System association to make a patronage refund payment. In particular, they seek to investigate what causes the regional heterogeneity in the patronage refund payment decision. It is unclear whether patronage refunds have been used more as a capital management tool or as a member recruitment and retention tool. This study aims to bring some clarity to this issue.

The authors use an empirical logistic model to estimate the probability of a positive patronage refund payment by a Farm Credit System association, controlling for variables related to the associations' balance sheet as reported in the associations' quarterly call reports.

The authors find there is evidence that Farm Credit Service associations use patronage refunds as a capital management tool, at least in part. However, they also find that there are still significant regional differences in the patronage refund payment decision even after controlling for variables affecting the associations' balance sheet. The authors conclude that this likely represents member heterogeneity in preferences for patronage refunds versus a discounted interest rate.

The present study is one of the few empirical papers to examine a broad panel of financial cooperatives. Because of this, the authors' paper provides valuable insight into the aggregate behavior of Farm Credit Service associations, particularly into whether they use patronage refunds as a capital management tool, or as a marketing and retention tool.