Aug 2026· EAST WEST JOURNAL OF BUSINESS AND SOCIAL STUDIES· 0 citations· 19 references
Abstract
Credit Risk Management (CRM) is essential for the stability and profitability of commercial banking institutions. This study evaluates the effectiveness of CRM practices implemented in commercial banks in Paro Dzongkhag, Bhutan. The information was collected through structured questionnaires distributed to all the relevant employees of five commercial banks located in Paro Dzongkhag. Results indicate that overall, respondents regard the CRM practices of the banks as effective; high scores were given to practices like collateral enforcement, credit limit setting and monitoring, systematic loan evaluation, and compliance with well-defined credit policies, hence showing strong pre- and post-loan supervising practices. The basic appraisal processes, such as creditworthiness assessment and regular credit scoring, were also rated positively, indicating a well-developed assessment system. On the other hand, lower ratings were observed in the areas of early warning systems aimed at detecting potential defaults, integration between credit officers and risk management units, and staff training on credit risk policies. These findings indicate that, although the institutions have strong policy underpinnings, much more remains to be done to improve proactive risk identification, interdepartmental cooperation, and continuous employee growth. In general, the paper finds that CRM practices among Paro Dzongkhag commercial banks are highly successful; however, the mitigation of the risks by the banks could be enhanced by enriching them with early warning systems, coordination procedures, and training systems, which can serve as practical recommendations to the decision makers of the commercial banks in Bhutan.
Credit risk management is an essential function of banking institutions because it helps minimize loan defaults, protect financial assets, and ensure long-term profitability. This study examines the scope and importance of credit risk management in The South Indian Bank Ltd. by analysing credit appraisal practices, loan monitoring, borrower assessment, recovery mechanisms, regulatory compliance, and overall banking performance. The study adopted a descriptive research design using both primary and secondary data collected from 100 respondents through a structured questionnaire. Multiple Linear Regression Analysis was selected as the statistical tool to examine the influence of credit risk management practices on banking performance. The findings indicate that effective credit risk management significantly improves financial stability and operational efficiency.
Manapuram Neela Nagalaxmi, M. Rajitha· International Journal of Cre...· 0 citations
This study examined credit risk management practices and their impact on the profitability of Deposit Money Banks in Nigeria. The study specifically investigated the effect of credit appraisal practices, loan monitoring practices, and collateral management practices on profitability. The study adopted the survey research design, while primary data were collected through structured questionnaires administered to employees of selected Deposit Money Banks in Nigeria. The population of the study consisted of 615 employees, while a sample size of 237 respondents was determined using the Krejcie and Morgan formula. Data were analyzed using percentages, mean scores, and standard deviation. The findings revealed that credit appraisal practices significantly improve profitability by reducing loan defaults and enhancing borrower assessment procedures. The study also found that loan monitoring practices positively influence profitability through regular supervision and improved repayment performance. Furthermore, collateral management practices were found to significantly enhance profitability by reducing financial losses associated with borrower default. The study concluded that effective credit risk management practices are essential for improving profitability, operational efficiency, and financial stability among Deposit Money Banks in Nigeria. The study recommended that banks should strengthen credit appraisal systems, improve loan monitoring mechanisms, enforce proper collateral management procedures, and provide regular training for credit management personnel.
Prince Godswill Akhimien· International Journal of Sci...· 0 citations
Savings and Credit Cooperative Societies (SACCOs) are central to Kenya's financial system through their contribution to savings mobilization, affordable credit provision, and expansion of financial inclusion. However, the increasing incidence of non-performing loans has continued to undermine their profitability, liquidity position, and long-term financial sustainability despite ongoing regulatory and supervisory reforms. Strengthening credit risk management has therefore become a strategic priority for enhancing loan portfolio quality and improving institutional performance. This study investigated the effect of credit risk management practices on the financial performance of Savings and Credit Cooperative Societies in Meru County, Kenya. The study was guided by Credit Risk Theory and employed a positivist research philosophy, quantitative research approach, and descriptive-correlational research design. The study targeted 186 management personnel from 50 SACCOs within Meru County, with all respondents included through a census approach. Primary data were collected using structured questionnaires whose validity and reliability were confirmed before the main data collection exercise. Data analysis involved descriptive statistics, Pearson Product Moment Correlation, and simple linear regression analysis. A total of 170 completed questionnaires were returned, representing a response rate of 91.4%. The results revealed a strong positive and statistically significant association between credit risk management practices and financial performance (r = 0.661, p < 0.05). Regression analysis further demonstrated that credit risk management practices significantly influenced financial performance (β = 0.661, p < 0.001), accounting for 43.7% of the observed variation in financial performance, leading to the rejection of the null hypothesis. The study concludes that strengthening borrower evaluation, credit appraisal procedures, loan monitoring, periodic portfolio reviews, and debt recovery processes substantially improves financial performance by reducing credit losses and maintaining healthier loan portfolios. The study recommends that SACCOs continuously strengthen their credit risk management frameworks, invest in staff training, adopt digital credit monitoring technologies, and regularly review lending policies to enhance financial sustainability and long-term institutional performance.
Faith Gatwiri Kirimi, Fredrick Mutea, N. Rintari· Journal of Finance and Accou...· 0 citations
Savings and Credit Cooperative Societies (SACCOs) play an important role in savings mobilization and access to affordable credit, but Credit risk remains a challenge to their financial performance. Anchored on Asymmetric Information Theory, a correlational research design was adopted. The population comprised 300 senior managers from 75 registered SACCOs. A stratified sample of 171 managers was selected, and 143 usable questionnaires were returned, representing 83.6% response rate. Data were analyzed using descriptive statistics and simple linear regression, complemented by audited financial data for 2021–2025. Credit risk identification practices were highly implemented, although Credit Reference Bureau reports were comparatively uneven. Credit risk identification had a strong positive relationship with financial performance (R = .678) and explained 46.0% of its variance in financial performance. The model was significant, and the null hypothesis was rejected. The study recommends standardized borrower identification, deepening use of credit-reference, digital profiling tools, and continuous monitoring.
Keywords: credit risk identification, financial performance, SACCOs, non-performing loans.
M. A. Odhiambo, Mark Ouche Obonyo· African Development Finance...· 0 citations
Banking is increasingly shaped by expanding data volumes, more complex borrower behaviour, and stricter credit risk management requirements. Under such conditions, scoring models are becoming especially relevant as instruments for the formalised assessment of creditworthiness, combining analytical accuracy, speed of decision-making, and the possibility of integration into the bank’s risk management system. The study compares traditional and modern scoring models in bank credit risk management and proposes an approach to their practical use in Ukrainian banking. Its focus is on scoring models as instruments for credit risk assessment. The study combines comparative analysis, matrix modelling, simulation, statistical modelling, and machine learning methods. Given limited access to primary banking information and confidentiality requirements, the empirical analysis was conducted on a synthesised demonstration dataset designed to reflect the structure of a real retail credit portfolio. For the analysis, a sample of 1,000 observations with a default share of 22.0% was constructed, and logistic regression, discriminant analysis, Random Forest, XGBoost, and a hybrid logit + ML re-ranking model were used for comparison. The results showed that XGBoost provided the highest predictive accuracy, with an AUC-ROC of 0.861, Gini of 0.722, Recall of 0.781, and Brier score of 0.141, whereas logistic regression demonstrated an AUC-ROC of 0.781 and retained advantages in terms of interpretability and suitability for validation. The hybrid model achieved an AUC-ROC of 0.848, Gini of 0.696, Recall of 0.773, and Brier score of 0.144, thus ensuring the best balance between accuracy, explainability, calibration, and practical applicability. Practically, the study offers an adaptive approach to selecting scoring models and a matrix for evaluating them under Ukrainian banking conditions, taking into account the requirements of the regulatory environment, data quality, and the instability of the operating conditions of Ukrainian banks.
Commercial banks depend mainly on lending activities as an important source of income, but lending exposes commercial banks to credit risk arising from uncertainty about borrowers’ ability and willingness to repay. Therefore, effective client appraisal is important in obtaining and verifying information about borrowers before credit is advanced. This study examined the effect of client appraisal on the loan performance of commercial banks in Kenya. The study was anchored on Asymmetric Information Theory, which explains how information differences between lenders and borrowers can contribute to adverse selection and moral hazard in credit markets. A cross-sectional survey design was adopted. The target population comprised 38 licensed commercial banks in Kenya, with one credit-risk manager targeted from each bank. Three banks were used for piloting, leaving 35 banks for the main study. A census approach was used, and 33 usable questionnaires were returned, representing a response rate of 94.3%. Primary data were collected using a structured questionnaire, while secondary information was obtained from relevant banking records and regulatory reports. Descriptive statistics, Pearson correlation and simple linear regression were used to analyse the data. The findings showed that commercial banks widely practised client appraisal, particularly through collateral valuation, verification of collateral documentation, assessment of collateral adequacy, evaluation of credit history and review of previous credit records. Pearson correlation analysis established a strong positive relationship between client appraisal and loan performance (r = .785, p < .001). The corresponding simple linear regression indicated that client appraisal explained 61.6% of the variation in loan performance (R² = .616). The study concludes that stronger client appraisal is associated with better loan performance among commercial banks in Kenya. The study recommends that commercial banks strengthen borrower-information verification, credit-history assessment, collateral evaluation and other appraisal mechanisms while integrating traditional appraisal with reliable digital credit-information systems.
E. Ochieng', A. Munene, A. Kamau· East African Journal of Busi...· 0 citations
We use cookies to run the site and, with your consent, for analytics and to show ads.
See our Cookie Policy.
