Enterprise Risk Management in Kosovo’s Banking Sector

Open access

Abstract

Today risk management plays a vital role in business. Each firm, whether big or small, makes an effort to manage risk more effectively. Risk management is very important in the financial system, especially in banks. Billions of Euros are spent each year on the financial reporting of banks. Banks should implement effective solutions in risk management to mitigate their risks. Great financial debate that originated in the 1990s is reportedly linked to errors that occurred in the banking sector due to poor risk management. It should be noted that today technology plays a key role in risk management and it has already had a positive effect on the financial industry. Analysis of risk and its management has become significant in the Kosovo economy since the post-war period. The nature of the banking business is threatened by risks because more financial products are becoming complicated. The main role of banks is intermediation between those who have resources and those seeking them. Banks face various risks at the corporate level, such as operational, liquidity, legal, credit, and market risks; thus, these risks should be converted into a composite measure. This research aims to determine practices and effects of risk management in the banking sector. Relevant data were collected from banks through questionnaires and telephone interviews; analysis has been conducted using statistical tools. This study will engage both the quantitative and qualitative methods of data analysis. Dependent variables will be separated from independent variables, and regression analysis will be used to analyse the quantitative data.

AIRMIC, Alarm, IRM. (2010). A structured approach to Enterprise Risk Management (ERM) and the requirements of ISO 31000. Retrieved February 5, 2016, from http://www.ferma.eu/app/uploads/2011/10/a-structured-approach-to-erm.pdf

Allayannis, G., Lei, U., & Miller, D. (2005). Corporate Governance and the Hedging Premium Around the World. Working paper, Darden School of Business (University of Virginia) and Kelley School of Business (Indiana University).

Barth, J. R., Caprio, G., & Levine, R. (2004). Bank Regulation and Supervision: What Works Best? Journal of Financial Intermediation, 13, 205-248. https://doi.org/10.1016/j.jfi.2003.06.002

Basel Committee on Banking Supervision. (2006). Principles for the management of credit risk. Retrieved April 17, 2016, from http://www.bis.org/publ/bcbs75.htm

Bessis, J. (2003). Risk Management in Banking (2nd ed.). Chichester: Wiley.

CBK Financial Supervision. (2015). Bankat Komerciale [Comercial Bank]. Retrieved February 12, 2016, from http://bqk-kos.org/index.php?id=20

Central Bank of the Republic of Kosovo. (2014). Financial Stability Report. Retrieved January 20, 2016, from http://bqk-kos.org/repository/docs/2014/BQK_FSR_4.pdf

Edwards, B. (2004). Credit management handbook (5th ed.). Gower Publishing, Ltd.

Emory, C. N., & Cooper, D. R. (1991). Business research methods (4th ed.). Boston, MA: Irvin.

Fatemi, A. & Fooladi, I. (2006). Credit Risk Management: A Survey of Practices. Managerial Finance, 32(3), 227-233. https://doi.org/10.1108/03074350610646735

Feiguine, G., & Nikitina, T. (2008). Die Vereinbarung Basel II - Einflüsse auf den russischen Finanzsektor. Working Paper No. 44, University of Applied Sciences bfi Vienna, February 2008.

Fisher, R. A. (1922). The goodness of fit of regression formulae, and the distribution of regression coefficients. Journal of the Royal Statistical Society, 85(4), 597-612. https://doi.org/10.2307/2341124

Fuller, W. A. (1987). For a good introduction to error-in-variables, Measurement Error Models. John Wiley & Sons. ISBN 0-471-86187-1.

Glantz, M. (2003). Managing bank risk. London: Academic Press.

Hamel, J., Dufour, S., & Fortin, D. (1993). Case study methods. Newbury park, CA: Sage. Retrieved from http://www.fhvie.ac.at/workingpapers_detail.aspx?id=59&LN=DE

Jorion, P., & Khoury, S. J. (1995). Financial risk management: Domestic and international dimensions. Cambridge, Massachusetts: Blackwell Publishers.

Jorion, P. (2009). Value at risk: The new benchmark for managing financial risk (3rd ed.). McGraw-Hill. https://doi.org/10.1007/s00362-009-0296-7

Kedar, B. Z. (1970). Again: Arabic Risq, Medieval Latin Riscum. Studi Medievali. Centro Italiano di Studi Sull Alto Medioevo, Spoleto.

KPMG. (n.d.). Basel Briefing 8. Retrieved from www.kpmg.com

Legendre, A. M. (1805). Nouvelles méthodes pour la détermination des orbites des comètes [New Methods for the Determination of the Orbits of Comets] Paris: F. Dido. (in French)

Ministry of Foreign Affairs (2015). Economy and Investments in Kosovo. Retrieved February 20, 2016, from http://www.mfa-ks.net/%20?page=1,119

Oxford English Dictionary. (n.d.). Risk. Retrieved from https://en.oxforddictionaries.com/definition/risk

Patton, M. Q. (1980). Qualitative Evaluation Methods. Beverly Hills, CA: Sage Pike, R., & Neale, B. (2003). Corporate finance and investment: Decisions and strategies (4th ed.). Financial Times Management.

Raghavan, R. (2003). Risk management in banks. Retrieved January 3, 2016, from http://www.icai.org/resource_file/11490p841-851.pdf

Ryan, B., Scapens, R. W., & Theobald, M. (1999). Research Method and Business Students (2nd ed.). Academic Press Ltd.

Saiful, A. R. (2005). Critical Issues on Islamic Banking and Financial Markets. Published by Dinamas Publishing. Retrieved January 12, 2016, from http://irep.iium.edu.my/214/1/Critical_issues_on_Islamic_Banking_and_financial_markets.pdf

Santomero, A. M. (1996). Commercial bank risk management: An analysis of the process. Journal of Financial Services Research, 12(2). Retrieved February 3, 2016, from http://fic.wharton.upenn.edu/fic/papers/95/9511b.pdf

Saunders, M., Lewis, P., & Thornhill, A. (2000). Research methods for business students (2nd ed.). FT Prentice Hall.

Stigler, S. M. (1981). Gauss and the Invention of Least Squares. The Annals of Statistics, 9(3), 465-474. https://doi.org/10.1214/aos/1176345451

Turabian, K. L. (2013). A Manual for Writers of Research Papers, Theses, and Dissertations, Chicago style for students and Researchers, (8th ed.). In W. C. Booth, G. G. Colomb, J. M. Williams, and The University of Chicago Press Editorial Staff (Eds.). Chicago and London: The University of Chicago Press.

Vaidyula, S. R., & Kavala, A. (2011). Enterprise Risk Management for Banks. Retrieved January 29, 2016, from http://www.wipro.com/documents/enterprise_risk_management_for_banks.pdf

Van Gestel, T., & Baesens, B. (2008). Portfolio models for credit risk. Credit Risk Management (pp. New York: Oxford University Press Inc. https://doi.org/10.1093/acprof:oso/9780199545117.003.0005

Van Gestel, T., & Baesens, B. (2009). Credit Risk Management Basic Concepts: financial risk components, rating analysis, models, economic and regulatory capital, Oxford University pp. 1-59.

Journal Information

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 249 249 55
PDF Downloads 216 216 81