AN OVERVIEW OF THE RISKS ASSOCIATED WITH BANK LENDING IN THE BANKING SECTOR
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:
- Find out the extent to which risk of lending constituted major problems.
- find out the extent to which risk is associated with lending in the banking sector.
- Find out the need for effective & efficient of risk in the growth of banks.
- 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
- STATEMENT OF PROBLEMS
- PURPOSE/OBJECTIVE OF THE STUDY
- RESARCH QUESTIONS
- STATEMENT OF STUDY
- SIGNIFICANCE OF STUDY
- SCOPE, LIMITATIONS AND DELIMITATIONS
- DEFINITIONE OF TERMS.
- LITERATURE REVIEW
2.1 NATURE AND DIMENSIONS OF RISKS
- FUNCTIONAL DEFINITION OF RISK
- RISKS MANAGEMENT
- RATIONAL FOR BANK WODE RISK MAMAGEMENT
- TYPES OF BANK RISKS
- RISK AND UNCERTAINLY
- BANKS & RISK OF LENDING
- THE CONCEPT OF CREDIT RISK
- THE CREDIT RISK IDENTIFIACTION
- CREDIT RISK ASSESSEMENT
- CLASSIFIACTION & HANDLING OF RISKS.
- FRAMEWORK FOR LENDING
- LENDING PRINCILES
- RESEARCH DESIGN AND LETHODOLOGY
3.1 RESEARCH DESIGN
- AREA OF STUDY
- SAMPLE AND SAMPLING TECHNIQUE
- INSTRUMENT FOR DATA COLLECTION
- METHODS OF DATA PRESENTATION
- TECHNIQUE OF DATA ANALYSIS
- DATA PRESENTATION AND ANALYSIS
4.1 DESIGNS AND FEATURES OF FINANCIAL REPORTS IN THE
- ASSESSMENT OF INSTITUTIONAL STRUCTURE FOR RISKS
- PRSENTATION OF DATA ANALYSIS
- TEST OF HYPOTHESIS
FINDINGS, RECOMMENDATION AND CONCLUSION
- SUMMARY OF FINDINGS
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.
- STATEMENT OF PROBLEMS:
The risk of lending can be innumerable sometimes intractable. But there are also riskless loan in the sense that such loans are more than 100% cash collateralized In any case, the number characteristics of risk can only be analyzed meaningfully in the content of specified loans.
For this reason clearing the lending doubts begins with:-
- Risk identification
- Discovering and knowing the risk including their structure and incidence.
- Enabling financial analyst identify in his credit report that a particular loan request can be associated with certain risks.
- Enable the analysts conceivably identify and give an indication of their nature (risk) and characteristics.
- Idently and integrating risk inherent in the so called 5os of lending (credit)
- Finally, getting over the hump in CAMEL.
- PURPOSE\OBJECTIVE OF THE STUDY
The purpose of the study is to.
- Check the effect of lending on bank risk
- To weigh the relationship between risk and lending
- To check the effect of risk associated with bad debt as regards growth in the banking sector.
- To analyses the credit process and issues
- To analyze the need for security documentation of credit.
- RESEARCH QUESTIONS
An in-depth look into the following questions would present sufficient solution to the problems of study.
- What is the effect of lending in the banking sector.
- What is the relationship between risk and lending as regards growth in the banking sector
- What are credit processes and issue
- Is there any need for security documentation of credit?
- STATEMENT OF HYPOTHESIS
In this research work we shall formulate a policy that is based on the assumption that lending if well articulated and efficiently executed can serve as a potent tool in the banking sector.
The following are the hypothesis of the study.
Ho: The blending and risks of lending if properly taken cannot boost the growing rate of banks in Nigeria.
Hi: The lending and risk of lending if properly taken can boost the growing rate of banks in Nigeria.
Ho: There exist a negative relationship between risk and lending.
Hi: There exist a positive relationship between risk and lending.
Ho: Grow in the banking sector is not affected by crisis of bad debt.
Hi: Credit processed and issue should not be greatly looked into by
Hi: Credit processes and issue should be greatly looked into.
Ho: There is need for security documentation by banks.
Hi: There is need for security documentation by banks.