THE STUDY OF CREDIT RISK MANAGEMENT AND ITS IMPACT ON OPERATIONAL PERFORMANCE: CASE STUDY OF THE STANDARD CHARTERED BANK IN SIERRA LEONE
DOI:
https://doi.org/10.46827/ejsss.v10i1.1735Ključne riječi:
Key Performance Indicators (KPIs), Forex (FX), Basel Committee on Banking Supervision (BCBS), Hong Kong and Shanghai Banking Corporation (HSBC), Coronavirus disease 2019 (COVID-19), Contingency Funding Plans (CFPs), Leones (Le)Sažetak
Managing credit risk is a crucial concern for banks in light of various factors such as global economic crises, digital transformation, technological advancements, and the use of artificial intelligence in banking. Regulators and the Basel regulations require banks to have a transparent and comprehensive understanding of their customers and credit risk. Banks must keep track of, assess, limit, and evaluate credit risk in their entire portfolio and single transactions, as well as consider its connection with other types of risks. The Basel II Accord provides standards for banks to implement new methods for measuring and handling credit risk. Effective credit risk management can impact banks' performance, earnings, and image. Liquidity risk management is another key aspect that requires banks to have a robust process for identifying, measuring, monitoring, and controlling liquidity risk. Banks must have contingency funding plans (CFPs) that clearly outline the strategies for dealing with liquidity shortages in crises. They should also hold a buffer of unencumbered, high-quality liquid assets to protect against various liquidity stress scenarios. Bank performance is a multidimensional concept that encompasses financial and market performance, human resource performance, organizational efficiency, and customer-centered performance. It is often assessed holistically by considering these and other relevant dimensions. The specific components that contribute to bank performance may vary depending on the methodology used by researchers or analysts. The research findings suggest that effective management of credit risk has improved the operational performance and liquidity of the bank. Operational performance has a wide range of factors, such as financial and market performance, human resource performance, organizational efficiency, and customer-concentrated performance. However, for this research, operational performance was limited to the bank’s profitability, equity, asset efficiency, and return on equity, which fall under the purview of the financial factor.
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