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
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
TABLE OF CONTENT
BACKGROUND OF THE STUDY
STATEMENT OF PROBLEMS
PURPOSE/OBJECTIVE OF THE STUDY
STATEMENT OF STUDY
SIGNIFICANCE OF STUDY
SCOPE, LIMITATIONS AND DELIMITATIONS
DEFINITIONE OF TERMS.
NATURE AND DIMENSIONS OF RISKS
FUNCTIONAL DEFINITION OF RISK
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
RESEARCH DESIGN AND LETHODOLOGY
AREA OF STUDY
SAMPLE AND SAMPLING TECHNIQUE
INSTRUMENT FOR DATA COLLECTION
METHODS OF DATA PRESENTATION
TECHNIQUE OF DATA ANALYSIS
DATA PRESENTATION AND ANALYSIS
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
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
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.
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 negligenceincompetence, which may have dial
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
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.
1.2 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:-
1. Risk identification
2. Discovering and knowing the risk including their
structure and incidence.
3. Enabling financial analyst identify in his
credit report that a particular loan request can be associated with certain
4. Enable the analysts conceivably identify and
give an indication of their nature (risk) and characteristics.
5. Idently and integrating risk inherent in the so
called 5os of lending (credit)
6. Finally, getting over the hump in CAMEL.
1.3 PURPOSEOBJECTIVE OF THE STUDY
The purpose of the study is to.
1. Check the effect of lending on bank risk
2. To weigh the relationship between risk and
3. To check the effect of risk associated with bad
debt as regards growth in the banking sector.
4. To analyses the credit process and issues
5. To analyze the need for security documentation
1.4 RESEARCH QUESTIONS
An indepth look into the following questions would present sufficient solution
to the problems of study.
1. What is the effect of lending in the banking
2. What is the relationship between risk and
lending as regards growth in the banking sector
3. What are credit processes and issue
4. Is there any need for security documentation of
1.5 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
Ho: Grow in the banking sector is not affected by crisis of
Hi: Credit processed and issue should not be greatly looked
Hi: Credit processes and issue should be greatly looked
Ho: There is need for security documentation by banks.
Hi: There is need for security documentation by
1.6 SIGNIFICANC OF STUDY
Without an indepth look into risk management banks survival will be greatly
threatened. This is one of the reasons why some banks fold up since there are
no adequate information on risk management as regards lending in banks.
Thus, this study is directed at throwing more light into the need for an
overview of risk associated with bank lending i.e risk management and control
in the bank sector.
The findings of the study will be useful to the following:
1. Existing banks as well as those yet to be
2. The management of the selected banks chosen for
the study of risk management and control.
Specially, this study will provide information and relevant data to the bank
management to enable her cope with the task of development in the midst of
credit risk. The study is also justified as it would be relevant due to its
usefulness to loan officers as well as the generality of banks who would also
bear the strain of loan recovery, including the fact that the study will also
make it possible to examine hoe bad debt reduction will be achieved and
sustainable banking growth and also make the bank management and generality of
banks to be aware of what role they have to play in the extension of credit.
1.7 DEFINITION OF TERMS:-
Risk is the possibility of loss, injury, disadvantage
MANAGEMENT: Risk management is the sum of all proactive
management – directed activities within a program that are intended to
acceptable accommodate the possibility of failures in elements of the program.
Lending is the extension of credit to investororrowers who ware in most
need of the money for investment purposes.
Credit is the permission to delay payment for goods or services until after
they have been received.
TERMS AND CONDITIONS APPLY
For more informations on project materials and more