Solutions for Assessment and Improving of Banks’ Management of Credit Risk

This Paper aims to provide solutions for assessment and development for credit risk management in banking.Credit risk arises from the potential that a borrower or counterparty will fail to perform on an obligation. For most banks, loans are the largest and most obvious source of credit risk. However, there are other sources of credit risk both on and off the balance sheet. Off-balance sheet items include letters of credit unfunded loan commitments, and lines of credit. Other products, activities, and services that expose a bank to credit risk are credit derivatives, foreign exchange, and cash management services.Credit risk management is very important to banks as it is an integral part of the loan process. It maximizes bank risk, adjusted risk rate of return by maintaining credit risk exposure with view to shielding the bank from the adverse effects of credit risk. Bank is investing a lot of funds in credit risk management modeling.This study try to explore various parameters pertinent to credit risk management as it affect banks’ financial Performance.

Keywords:

Credit Risk , Credit Risk Management , Credit Risk Assessment , Banking