The Effect of Credit Risk Management on Financial Institutions in Sierra Leone

Samuel Karim

doi:doi:10.11648/j.ijafrm.20230803.13

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The Effect of Credit Risk Management on Financial Institutions in Sierra Leone

Samuel Karim

Published in International Journal of Accounting, Finance and Risk Management (Volume 8, Issue 3)

Received: 5 June 2023 Accepted: 28 June 2023 Published: 17 August 2023

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Abstract

The aim of study is to examine the effect of credit risk management on the performance of financial institutions in Sierra Leone: A case study of Sierra Leone commercial bank Makeni branch. The study specific objectives were; examine the factors influencing credit performance, effects of credit risk management on the performance and the ways of credit risk management on the performance of the Sierra Leone Commercial Bank (SL) Limited. In carrying out the research study, the researcher used qualitative method. A descriptive research designed is used in conducting the findings. Purposive sampling technique is used in order to obtain data from the respondents. The target population of the study is 20 while the sample size is 6 respondents. The findings revealed that (67%) of respondents agreed that internal factors greatly influence loan performance while (33%) of participants agreed that external factors are those that influence the performance of Sierra Leone commercial Bank, Makeni Branch. The research implies that the following internal factors like capital adequacy, credit risk, management efficiency, liquidity management and poor location of the institution have great impact in terms of influencing the daily activities of the institution. The institution has absolute control over such factors either in decision making process or any other action they may wish to take over in the institution while the following external factors like inflation rate, interest rate, loan size, loan policies and savings rate that affects the operation of the institution. The reason being external factors are those factors which the institution has little or no control over of in terms of it operational activities. The research also revealed the effect of credit risk like reducing operation costs, causes of economic down turn, it affect changes in interest rate and it reduces profit and loss account at Sierra Leone commercial Bank Makeni Branch. The study recommends that Sierra Leone commercial bank Makeni branch should establish a department of risk management that will enable them to minimize or control their credit risks and also should make diversification in the credit facilities in order to reduce the credit risk.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 8, Issue 3)
DOI	10.11648/j.ijafrm.20230803.13
Page(s)	79-88
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Banks, Credit Control, Economy, Financial Institutions

References

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[2]	Al-Tamimi, H. and Al-Mazrooei M., (2007); Banks’ “Risk Management: A Comparison Study of UAE National and Foreign Banks”s, The Journal of Risk Finance, Vol. 8 No. 4, pp. 394-409.
[3]	Al-Tamimi, H. andHassan, A. (2010), Factors Influencing Performance of the UAE Islamic and Conventional National Banks; Global Journal of Business research, 4 (2), 1-9.
[4]	Athanasoglou, P., Brissimis, S N., and Delis, M D. (2005); ‘‘Bank-specific, industry specific and macroeconomic determinants of Bank profitability’’ MPRA Paper No.153.
[5]	Athanasoglou, P. P., Sophocles, N. B. andMatthaios, D. D. (2005), Bank-specific, industry-specific and macroeconomic determinants of bank profitability, Working paper, Bank of Greece. 1 (1), 3-4.
[6]	BOU (2002), Economic & Financial Indicators, Monthly Economic Report, Kampala, 1-10.
[7]	Brown, M. H. (1998), The causes of Financial distress in local Bnaks in Afica and implications for prudential policy; United Nations Conference on Trade and Development, Development Policy Review Journal, 16 (2), 173-189.
[8]	Central Bank of Kenya (2013), Prudential Guideline for Institutions Licensed under Banking Act, CBK/PG/03, 82-124.
[9]	Dang, U. (2011), The CAMEL Rating System in Banking Supervision: a Case Study Dissertation, Arcada University of Applied Sciences, International Business.
[10]	Derban, W. K., Binner, J. M., &Mullineux, A. (2005), Loan repayment performance in Community Development Finance Institutions in the UK, small Business Economics, 25, 319-332.
[11]	Gallagher, G. T. (1989); Credit risk analysis 2nd Ed., New York, The MacMillan publishing. Inc.
[12]	Hubbard, R. F. (1997). Méthodes des sciences sociales. 11ème éd. Paris.
[13]	Kairu, P. K (2009), Credit Management, Second Edition, Focus Publishers Limited, Nairobi.
[14]	Singh, A. (2013) Credit Risk Management Practices in Ghana Commercial Banks. International Journal of Marketing and Management Research, 2, 47-51.

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APA Style

Samuel Karim. (2023). The Effect of Credit Risk Management on Financial Institutions in Sierra Leone. International Journal of Accounting, Finance and Risk Management, 8(3), 79-88. https://doi.org/10.11648/j.ijafrm.20230803.13

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Samuel Karim. The Effect of Credit Risk Management on Financial Institutions in Sierra Leone. Int. J. Account. Finance Risk Manag. 2023, 8(3), 79-88. doi: 10.11648/j.ijafrm.20230803.13

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Samuel Karim. The Effect of Credit Risk Management on Financial Institutions in Sierra Leone. Int J Account Finance Risk Manag. 2023;8(3):79-88. doi: 10.11648/j.ijafrm.20230803.13

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@article{10.11648/j.ijafrm.20230803.13,
  author = {Samuel Karim},
  title = {The Effect of Credit Risk Management on Financial Institutions in Sierra Leone},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {8},
  number = {3},
  pages = {79-88},
  doi = {10.11648/j.ijafrm.20230803.13},
  url = {https://doi.org/10.11648/j.ijafrm.20230803.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20230803.13},
  abstract = {The aim of study is to examine the effect of credit risk management on the performance of financial institutions in Sierra Leone: A case study of Sierra Leone commercial bank Makeni branch. The study specific objectives were; examine the factors influencing credit performance, effects of credit risk management on the performance and the ways of credit risk management on the performance of the Sierra Leone Commercial Bank (SL) Limited. In carrying out the research study, the researcher used qualitative method. A descriptive research designed is used in conducting the findings. Purposive sampling technique is used in order to obtain data from the respondents. The target population of the study is 20 while the sample size is 6 respondents. The findings revealed that (67%) of respondents agreed that internal factors greatly influence loan performance while (33%) of participants agreed that external factors are those that influence the performance of Sierra Leone commercial Bank, Makeni Branch. The research implies that the following internal factors like capital adequacy, credit risk, management efficiency, liquidity management and poor location of the institution have great impact in terms of influencing the daily activities of the institution. The institution has absolute control over such factors either in decision making process or any other action they may wish to take over in the institution while the following external factors like inflation rate, interest rate, loan size, loan policies and savings rate that affects the operation of the institution. The reason being external factors are those factors which the institution has little or no control over of in terms of it operational activities. The research also revealed the effect of credit risk like reducing operation costs, causes of economic down turn, it affect changes in interest rate and it reduces profit and loss account at Sierra Leone commercial Bank Makeni Branch. The study recommends that Sierra Leone commercial bank Makeni branch should establish a department of risk management that will enable them to minimize or control their credit risks and also should make diversification in the credit facilities in order to reduce the credit risk.},
 year = {2023}
}

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TY  - JOUR
T1  - The Effect of Credit Risk Management on Financial Institutions in Sierra Leone
AU  - Samuel Karim
Y1  - 2023/08/17
PY  - 2023
N1  - https://doi.org/10.11648/j.ijafrm.20230803.13
DO  - 10.11648/j.ijafrm.20230803.13
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 79
EP  - 88
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20230803.13
AB  - The aim of study is to examine the effect of credit risk management on the performance of financial institutions in Sierra Leone: A case study of Sierra Leone commercial bank Makeni branch. The study specific objectives were; examine the factors influencing credit performance, effects of credit risk management on the performance and the ways of credit risk management on the performance of the Sierra Leone Commercial Bank (SL) Limited. In carrying out the research study, the researcher used qualitative method. A descriptive research designed is used in conducting the findings. Purposive sampling technique is used in order to obtain data from the respondents. The target population of the study is 20 while the sample size is 6 respondents. The findings revealed that (67%) of respondents agreed that internal factors greatly influence loan performance while (33%) of participants agreed that external factors are those that influence the performance of Sierra Leone commercial Bank, Makeni Branch. The research implies that the following internal factors like capital adequacy, credit risk, management efficiency, liquidity management and poor location of the institution have great impact in terms of influencing the daily activities of the institution. The institution has absolute control over such factors either in decision making process or any other action they may wish to take over in the institution while the following external factors like inflation rate, interest rate, loan size, loan policies and savings rate that affects the operation of the institution. The reason being external factors are those factors which the institution has little or no control over of in terms of it operational activities. The research also revealed the effect of credit risk like reducing operation costs, causes of economic down turn, it affect changes in interest rate and it reduces profit and loss account at Sierra Leone commercial Bank Makeni Branch. The study recommends that Sierra Leone commercial bank Makeni branch should establish a department of risk management that will enable them to minimize or control their credit risks and also should make diversification in the credit facilities in order to reduce the credit risk.
VL  - 8
IS  - 3
ER  -

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Author Information

Samuel Karim

Accounting and Finance Department, College of Human Resources Sierra Leone, Faculty of Social and Management Sciences, Ernest Bai Koroma University of Science and Technology, Makeni, Sierra Leone

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APA Style

Samuel Karim. (2023). The Effect of Credit Risk Management on Financial Institutions in Sierra Leone. International Journal of Accounting, Finance and Risk Management, 8(3), 79-88. https://doi.org/10.11648/j.ijafrm.20230803.13

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ACS Style

Samuel Karim. The Effect of Credit Risk Management on Financial Institutions in Sierra Leone. Int. J. Account. Finance Risk Manag. 2023, 8(3), 79-88. doi: 10.11648/j.ijafrm.20230803.13

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AMA Style

Samuel Karim. The Effect of Credit Risk Management on Financial Institutions in Sierra Leone. Int J Account Finance Risk Manag. 2023;8(3):79-88. doi: 10.11648/j.ijafrm.20230803.13

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@article{10.11648/j.ijafrm.20230803.13,
  author = {Samuel Karim},
  title = {The Effect of Credit Risk Management on Financial Institutions in Sierra Leone},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {8},
  number = {3},
  pages = {79-88},
  doi = {10.11648/j.ijafrm.20230803.13},
  url = {https://doi.org/10.11648/j.ijafrm.20230803.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20230803.13},
  abstract = {The aim of study is to examine the effect of credit risk management on the performance of financial institutions in Sierra Leone: A case study of Sierra Leone commercial bank Makeni branch. The study specific objectives were; examine the factors influencing credit performance, effects of credit risk management on the performance and the ways of credit risk management on the performance of the Sierra Leone Commercial Bank (SL) Limited. In carrying out the research study, the researcher used qualitative method. A descriptive research designed is used in conducting the findings. Purposive sampling technique is used in order to obtain data from the respondents. The target population of the study is 20 while the sample size is 6 respondents. The findings revealed that (67%) of respondents agreed that internal factors greatly influence loan performance while (33%) of participants agreed that external factors are those that influence the performance of Sierra Leone commercial Bank, Makeni Branch. The research implies that the following internal factors like capital adequacy, credit risk, management efficiency, liquidity management and poor location of the institution have great impact in terms of influencing the daily activities of the institution. The institution has absolute control over such factors either in decision making process or any other action they may wish to take over in the institution while the following external factors like inflation rate, interest rate, loan size, loan policies and savings rate that affects the operation of the institution. The reason being external factors are those factors which the institution has little or no control over of in terms of it operational activities. The research also revealed the effect of credit risk like reducing operation costs, causes of economic down turn, it affect changes in interest rate and it reduces profit and loss account at Sierra Leone commercial Bank Makeni Branch. The study recommends that Sierra Leone commercial bank Makeni branch should establish a department of risk management that will enable them to minimize or control their credit risks and also should make diversification in the credit facilities in order to reduce the credit risk.},
 year = {2023}
}

Copy | Download

TY  - JOUR
T1  - The Effect of Credit Risk Management on Financial Institutions in Sierra Leone
AU  - Samuel Karim
Y1  - 2023/08/17
PY  - 2023
N1  - https://doi.org/10.11648/j.ijafrm.20230803.13
DO  - 10.11648/j.ijafrm.20230803.13
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 79
EP  - 88
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20230803.13
AB  - The aim of study is to examine the effect of credit risk management on the performance of financial institutions in Sierra Leone: A case study of Sierra Leone commercial bank Makeni branch. The study specific objectives were; examine the factors influencing credit performance, effects of credit risk management on the performance and the ways of credit risk management on the performance of the Sierra Leone Commercial Bank (SL) Limited. In carrying out the research study, the researcher used qualitative method. A descriptive research designed is used in conducting the findings. Purposive sampling technique is used in order to obtain data from the respondents. The target population of the study is 20 while the sample size is 6 respondents. The findings revealed that (67%) of respondents agreed that internal factors greatly influence loan performance while (33%) of participants agreed that external factors are those that influence the performance of Sierra Leone commercial Bank, Makeni Branch. The research implies that the following internal factors like capital adequacy, credit risk, management efficiency, liquidity management and poor location of the institution have great impact in terms of influencing the daily activities of the institution. The institution has absolute control over such factors either in decision making process or any other action they may wish to take over in the institution while the following external factors like inflation rate, interest rate, loan size, loan policies and savings rate that affects the operation of the institution. The reason being external factors are those factors which the institution has little or no control over of in terms of it operational activities. The research also revealed the effect of credit risk like reducing operation costs, causes of economic down turn, it affect changes in interest rate and it reduces profit and loss account at Sierra Leone commercial Bank Makeni Branch. The study recommends that Sierra Leone commercial bank Makeni branch should establish a department of risk management that will enable them to minimize or control their credit risks and also should make diversification in the credit facilities in order to reduce the credit risk.
VL  - 8
IS  - 3
ER  -

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