Risk Management of Islami Bank Bangladesh Limited (original) (raw)
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Risk Reporting of the Banking Sector of Bangladesh: A Time Horizon Analysis
Asian Journal of Finance & Accounting, 2018
The study focused on the practical scenarios of bank risk disclosures where it is assumed that adequate risk disclosures expand the path of transparency in the marketplace. The reason is that the financial disclosures, including risk items, represent their image of the current and potential investors, and can impact their mentality about investment. The research analyzed the credit risk, market risk and operational risk reporting intensities in their reports. It is noted that the maximum Risk Weighted Assets (RWA) are held for credit risk of the banking system whereas the remaining part of the system utilized by the market risk and operational risk. It is found that the risk for the top five (5) or the top ten (10) banks is extremely high. The concentration symptom of risk is not good as the fewer borrowers occupied the most of the credit.
Basel III came out with a comprehensive set of reform measures by correcting flaws perceived in Basel II, emphasizing the improvement of quantity and quality of capital base of the banks coupled with stricter liquidity rules with stronger supervision, better governance & risk management as well as strengthens bank's transparency & disclosure standards. Basel III reform package also addresses the lessons of the financial crisis. Bangladesh has adopted new rules phased in under Basel III in 2015 to strengthen the regulations of the banking sector for creating a sounder and safer financial system of the country. This paper analyzes secondary data collected from annual reports of 44 local commercial banks of Bangladesh for the period of January-December 2015. It analyzes the dynamics of Basel III indicators from the market disclosure of 2015 of the sample banks. This paper, in principle, aims to study the * This paper is an outcome of independent research work of the authors, written for BIBM Annual Banking Conference 2016. Views/analysis/recommendations shared are those of authors and do not necessarily reflect the official position of the organizations the authors are affiliated with. Page 2 of 35 first-year progress of Basel III implementation in Bangladesh. It examines the status of Capital to Risk Weighted Assets Ratio (CRAR), Common Equity Tier-1 (CET 1) ratio, Liquidity Coverage Ratio (LCR), and Leverage Ratio of local commercial banks of Bangladesh in complying with capital and liquidity standards of Basel III. It further evaluates whether there exist any correlation between CRAR and Non-Performing Loan (NPL) in the industry. Moreover, this study attempts to figure out the challenges perceived by the industry in attaining sustainable capital standards. Finally, it comes up with plausible way-outs assessed from first-year status of Basel III of commercial banks of Bangladesh and advocates how the role of prudent credit risk management can better help face the challenges of NPL in maintaining the capital standard of commercial banks of Bangladesh.
International Journal of Economics, Finance and Management Sciences
This paper on the compliance status of Basel-II of a state owned bank will provide a detailed picture of risk management of bank as well as a gross picture of Basel-II implementation status in Bangladesh. This study will also indicate any shortfall of bank in terms of Basel-II compliance and offer suitable recommendations.. In this Paper, I have divulged the calculation of eligible capital, total risk exposure, risk weighted assets and capital adequacy ratio for Agrani Bank Limited. Following the standardized approach to calculate risk weighted assets. I have also shown the impact of Basel II adoption and problems regarding its implementation in banking industry of Bangladesh.
Risk Disclosure Analysis of Indonesian Banking Based on Pillar 3 of Bassel II
Zenodo (CERN European Organization for Nuclear Research), 2022
Banking is an institution that functions as a place for financial management or financial intermediary (financial intermediary) between parties who have funds and those who manage these funds. Banking has a very important role in the collection or collection of funds and also the distribution of funds in the real sector which functions as a framework for economic growth. The results of this study indicate that risk disclosure is very important to be carried out in banking institutions. This is because banking institutions are very vulnerable to risk, with disclosure of the risks that will be faced by banking institutions in Indonesia in the future a management can be carried out on these risks in minimizing the adverse effects caused by these risks. Risk management provides a systematic and structured view in solving problems that may arise in the future. The application of this risk management in the banking world with the Basel II conversion is expected to make banks healthier so that the financial condition of a country will be better.
Corporate risk disclosure of Islamic and сonventional banks
Banks and Bank Systems
This study examines the degree of the corporate risk disclosure and its impact on the banking performance using annual data of banks listed on the UAE financial markets: Abu Dhabi Stock Exchange (ADX) and Dubai Financial Market (DFM) during the period 2003–2013. The authors conduct the content analysis of the annual reports to measure the degree of the corporate risk disclosure. In addition, they use the panel data regressions to analyze the impact of the corporate risk disclosure on the performance of the banks. The results show low degree of the overall corporate risk disclosure index, strategic risk disclosure index, operational risk disclosure index, damage risk disclosure index, and risk management disclosure index for UAE listed banks. In addition, the results reveal significant differences in the overall corporate risk disclosure, strategic risk disclosure, financial risk disclosure, and risk management disclosure between conventional and Islamic banks. However, the effect of...
2020
Islamic banking is a system of banking that avoids receipt and payment of interest in its transactions and conducts its operations in accordance with Shariah principles to achieve the objectives of Islamic economy. The main objective of this review paper is to compare the level of disclosure of information by the Islamic Banking sector in Bangladesh. Multiple linear regression techniques will be used to test the hypotheses under study. The findings of this review paper is the supervisory authorities should recognize the need to set up a regulatory framework that, while consistent with Islamic precepts, would be pragmatic and flexible enough to meet internationally-accepted prudential and supervisory requirements. Effective prudential supervision of Islamic Banks in their home countries is important to foster integration between Islamic and conventional banking systems.
International Journal of Economics, Business and Accounting Research (IJEBAR)
Compliance with financial reporting guidelines/standards promulgated by Regulatory Bodies has become a crucial issue of the day after a series of corporate debacles over a few years. Regulators, professional bodies and researchers throughout the world have expressed their concern about the need for improved accounting pronouncements and compliance for providing better information than previously required for the preparation and presentation of corporate financial reporting. The present study primarily focuses on the reporting disclosure levels and compliance with Bangladesh Bank (BB) Guidelines, Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Accounting Standard, Bangladesh/International Financial Reporting Standard (B/IFRS) and Securities and Exchange Commission (SEC) Rules of Islamic Financial Institutions in Bangladesh. Annual reports of (08) eight Islamic banks in Bangladesh have been examined for the year ending 2015. The results showed that the...
Research Paper 1 A STUDY OF FINANCIAL METRICS IN LEADING BANGLADESHI COMMERCIAL BANKS
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This study evaluates the performance of selected commercial banks in Bangladesh, focusing on key indicators such as profitability, liquidity, asset quality, and capital adequacy from 2015 to 2020. By employing financial ratio analysis and comparative evaluation, the study highlights the strengths and weaknesses of banks such as Dutch Bangla Bank, BRAC Bank, AB Bank, and others. The findings reveal significant disparities in performance, with some banks demonstrating robust profitability and growth, while others struggle with high non-performing loans and operational inefficiencies. The impact of external factors, including the COVID-19 pandemic, on the banking sector's profitability and resilience is also discussed. Recommendations emphasize the importance of risk management, regulatory compliance, and digital transformation to enhance competitiveness and sustainability. This study provides valuable insights for policymakers, financial institutions, and stakeholders in understanding and improving the dynamics of Bangladesh's banking sector. Keywords: Performance Analysis, Commercial Banks, Profitability, Liquidity, Capital Adequacy, Non-Performing Loans, Bangladesh Banking Sector.
Risk Management Practices: A Critical Diagnosis of Some Selected Commercial Banks in Bangladesh
The paper is about risk management practices of commercial banks in Bangladesh based on five commercial banks operating in Bangladesh. The number of respondents was 25, five from each bank. While collecting the requisite data, five points Likert Scale has been used. The objective of the study was to critically examine risk management practices of Bangladeshi banks i.e., types of risk facing a bank, procedure and techniques used to minimize the risk etc. The study also examines how far the banks follow the guidelines of Bangladesh Bank regarding risk management. The study reveals that credit risk, market risk and operational risk are the major risks to the bankers which are managed through three layers of management system. The Board of Directors performs the responsibility of the main risk oversight, the Executive Committee monitors risk and the Audit Committee oversees all the activities of banking operations. In the context of opinions regarding use of risk management techniques, it is found that internal rating system and risk adjusted rate of return on capital are relatively more important techniques used by banks.
Risk Disclosure Constituents in the Banking Book and the Financial Performance
Risk Disclosure Constituents in the Banking Book and the Financial Performance, 2023
Abstract The Global Financial Crisis had a profound impact on risk management practices, prompting significant changes in risk identification, measurement, disclosure, and control on a global scale. Basel III and other relevant regulatory measures were introduced to enhance risk-based capital management frameworks and establish additional liquidity buffers to withstand internal and external shocks, prioritizing the protection of depositors in retail banking over shareholders' interests. The new risk and regulatory environment brought forth challenges that continue to evolve, including emerging risks such as ESG risk, cyber security risk, and risk model validation. The dynamic nature of the banking sector necessitates ongoing updates and day-to-day management. However, increasing capital requirements often pose challenges in generating adequate returns on capital investments as mandated by the capital framework. Empirical studies examining the profitability of banks and the impact of Basel III regulatory requirements have yielded mostly negative and inconclusive results, although some argue that efficiency gains from the new standards can positively influence financial performance. This research utilizes panel data from the top ten accounting firms, which account for over 94% of the UK banking sector assets, spanning the years 2015 to 2022. Industry data, as well as data from the World Bank and IMF, are employed to conduct descriptive analysis to assess the financial soundness of the UK banking sector within the context of the capital framework and to compare UK financial indicators with EU data. However, due to data availability constraints, the descriptive analysis is limited to the range of 2005 to 2020. The research findings support the existing knowledge that the Basel III framework has enhanced risk measurement and the financial soundness of the UK banking sector, but it has also had a detrimental impact on financial performance. Moreover, the measurement criteria of Basel III appear to be controversial, as they have led to variations among banks in their model assumptions, validation, misapplication, and misinterpretation of the Basel Framework. This underscores the need for constant regulatory updates to effectively address the ongoing challenges posed by the Basel Framework. Key Words: Banking Regulation, Basel III, Global Financial Crisis, Panel Data Analysis, Risk Management, Risk Measurement Techniques, Risk Model Validation, UK banking sector.