FIN725 Assignment 1 Solution and Discussion
SEMESTER FALL 2019
CREDIT AND RISK MANAGEMENT (FIN725)
DUE DATE: JANUARY 24, 2020 MARKS: 10
The objective of this assignment is to enable the students in critically reading, reviewing, summarizing, and understanding the research articles so that they may be able to write their own articles in future.
Read carefully the attached research article and evaluate/summarize this article in your own words keeping in view the following points:
The background the research.
Your understanding about research including the main idea of the
The research question.
Objectives and significance of the research
The hypothesis proposed and tested.
Population and sample used.
Data collection techniques used in this research.
Statistical tools used in this research.
Conclusion of the research.
Any gap/limitation you feel for future research.
You are not supposed to summarize this article in bullet form or provide short answers to the above mentioned points. Instead you are required to critically review this article by providing your own understanding in the form of summarized article (Maximum 2000 words).
NOTE: You have to use your own word while writing this assignment. Copied material will be marked as ZERO.
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FIN725 Assignment 1 Solution and Discussion
Impact of Credit Risk Management on Banks Performance: A Case Study in Pakistan Banks
Syed Muhammad Hamza
Banking and finance department, GC university Faisalabad
This study captured the impact of credit risk management on performance of commercial banks in Pakistan. A fundamental research proposal was accepted in this study, and this was facilitated by the use of secondary data which was obtained from the SBP publications on banking sector survey, official websites and KSE. The pooled regression has been adopted to determine the impact of credit risk management on two performance methods. The findings revealed the fact that credit risk management is inversely associated with bank performance. For return on asset (ROA) analysis revealed that capital adequacy ratio (CAR), Loan loss provision ratio (LLPR), liquidity ratio (LR) and Non-performing loan ratio (NPLR) variables have significant impact on return on assets (ROA). The Loan loss provision ratio (LLPR), liquidity ratio (LR) and Non-performing loan ratio (NPLR) have negative while the capital adequacy ratio (CAR), loan and advances (LAR), and SIZE have positive impact on the return on assets.In relation to return on equity , the CAR, LAR and LLPR variables have significant impact on ROE. In this model the LLPR, NPLR and LR variables have negative and CAR, LAR and SIZE variables have positive impact on the dependent variable.
Keywords: credit risk management, financial performance, commercial banks.