ASSESSMENT OF RISK MANAGEMENT AND CREDIT ADMINISTRATION IN UNION BANK PLC,

ASSESSMENT OF RISK MANAGEMENT AND CREDIT ADMINISTRATION IN UNION BANK PLC

 CHAPTER ONE INTRODUCTION

2.1    Introduction

The literature covers extract from source documents in line with the objectives of the study. The literature shall be segmented into the following sub-themes. The concept of risk management in commercial banks, the concept of credit administration, techniques of risk management in commercial banks, credit management in commercial banks, as well as the constraint of risk management and credit administration. 2.2    Concept of Risk Management in Commercial Banks Risk Management is the identification, assessment, and prioritization of risk or the effect of uncertainty on objectives of an organization, by coordinated economical application of resources to minimize, monitor, and control the probability and the impact of unfortunate events or to maximize the realization of opportunities. Risk can come from uncertainty in the financial market, project failures at any phase in development, production, or sustainment life-cycles, legal liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attack from an adversary or event of uncertain root-cause (Egbe, 2007). Risk management in commercial banks basically focuses on credit risk. Credit risk management is the process used to systematically manage the exposure of financial institutions to loan delinquency and default. The process consists of the following four stages: the identification of potential losses from delinquencies and defaults, evaluation of the potential frequency and severity of losses from credit risks; development and selection of methods for managing the risks so as to minimize losses and maximize business value, and implementation and an ongoing monitoring review of the selected methods (Okoh, 2009). Thus maximization of business value by preventing or minimizing losses from delinquency and default and promoting prompt loan repayment by borrowers is the principal objective of credit risk management in commercial banks. Bank business value depends on the expected magnitude, timing, and variability associated with future net cash flows that will be available to provide shareholders with a return on their investment. Delinquency and default results in losses that reduce business value. Credit risk management seeks to mitigate this reduction in business value by designing a system that prevents, reduces, or deal with delinquencies and defaults when they occur. Credit risk management is therefore both an ex-ante and ex-post activity (Lawal, 2007). The purpose of risk management in commercial banks is to reduce losses arising from default in payment of loans. As such in order to survive, these institutions must balance risks as well as returns. For a bank to have a large consumer base, it must offer loan products that are reasonable enough. However, if the interest rate in loan products is too low, the bank will suffer from losses. In terms of equity, a bank must have a substantial amount of capital on its reserve, but not too much that it misses the investment revenue, and not too little that it leads itself to financial instability. The complexity and derivatives is a factor that gave rise to risk management in the financial institution and commercial bank in particular (Kent, 2009). 2.3    Credit Administration in Commercial Bank Credit Administration is the management of a loan portfolios. This involves the evaluation of loan proposals as well as appraising the capacity of borrowers and the disbursement and monitoring of loans (Egbe, 2011).

Credit administration in commercial bank help to reduce risks of delinquency and default. An efficient loan appraisal system is very important in this respect, loan appraisal is the process of determining in advance the various lending parameters and determining investment opportunities available to farmers that remain unexploited for want of credit, loan appraisal also involves determination of overall loan limit for each borrower based on his debt capacity; loan duration and phasing of the disbursement to coincide with various implementation stages of the business project

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How To Write Chapter Three Of Your Research Project (Research Methodology)

  • Methodology In Research Paper


    Chapter three of the research project or the research methodology is another significant part of the research project writing. In developing the chapter three of the research project, you state the purpose of research, research method you wish to adopt, the instruments to be used, where you will collect your data, types of data collection, and how you collected it.

    This chapter explains the different methods to be used in the research project. Here you mention the procedures and strategies you will employ in the study such as research design, study design in research, research area (area of the study), the population of the study, etc. You also tell the reader your research design methods, why you chose a particular method, method of analysis, how you planned to analyze your data.

    Your methodology should be written in a simple language such that other researchers can follow the method and arrive at the same conclusion or findings.

    You can choose a survey design when you want to survey a particular location or behavior by administering instruments such as structured questionnaires, interviews, or experimental; if you intend manipulating some variables.

    The purpose of chapter three (research methodology) is to give an experienced investigator enough information to replicate the study. Some supervisors do not understand this and require students to write what is in effect, a textbook.

    A research design is used to structure the research and to show how all of the major parts of the research project, including the sample, measures, and methods of assignment, work together to address the central research questions in the study. The chapter three should begin with a paragraph reiterating the purpose of research. It is very important that before choosing design methods try and ask yourself the following questions: Will I generate enough information that will help me to solve the research problem by adopting this method?

    Method vs Methodology

    I think the most appropriate in methods versus methodology is to think in terms of their inter-connectedness and relationship between both. You should not beging thinking so much about research methods without thinking of developing a research methodology.

    Metodologia or methodology is the consideration of your research objectives and the most effective method and approach to meet those objectives. That is to say that methodology in research paper is the first step in planning a research project work.

    Design Methodology: Methodological Approach

    Example of methodology in research paper, you are attempting to identify the influence of personality on a road accident, you may wish to look at different personality types, you may also look at accident records from the FRSC, you may also wish to look at the personality of drivers that are accident victims, once you adopt this method, you are already doing a survey, and that becomes your metodologia or methodology.

    Your methodology should aim to provide you with the information to allow you to come to some conclusions about the personalities that are susceptible to a road accident or those personality types that are likely to have a road accident.

    The following subjects may or may not be in the order required by a particular institution of higher education, but all of the subjects constitute a defensible in metodologia or methodology chapter.

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