UNDERSTANDING RISK MANAGEMENT PRACTICES IN COMMERCIAL BANKS: THE CASE OF THE EMERGING MARKET

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Abstract

This study examines how risk management practices can be influenced by factors, including understanding risk management, risk assessment & analysis, risk identification, risk monitoring and credit risk analysis in commercial banks of Pakistan. The collected data satisfied the reliability requirement and regression and correlation analyses were adopted. The results suggest that understanding risk and risk management (URM), risk assessment and analysis (RAA), risk identification (RI), risk monitoring (RM) and credit risk analysis (CRA) have positive significant impact on risk management practices (RMP). This suggests that commercial banks in Pakistan need to pay attention to URM, RAA, RI, RM and RA. Moreover, RM and RAA are prominent variables which influence RMP; therefore commercial banks of Pakistan should focus on RM and RAA.

Keywords: Commercial Banks, Risk Management Practices, Risk Analysis, Pakistan, Risk Management, Risk Monitoring

JEL Classification: G32, G20, G21, G28

Received: 17.04.2018
Accepted: 31.05.2018
Published online: 04.07.2018

How to cite this paper: Muhammad, B., Khan, S., & Xu, Y. (2018). Understanding risk management practices in commercial banks: The case of the emerging market. Risk Governance and Control: Financial Markets & Institutions, 8(2), 54-62. https://doi.org/10.22495/rgcv8i2p3