Assessing Credit Risk Management Practices in the Banking Industry of Ghana: Processes and Challenges

Abstract

The banking industry of Ghana is faced with several challenges among them is credit risk management notwithstanding the fact that, knowledge and technology in that field have increased. Additionally, many banks have created Credit Risk Management Departments which are responsible for managing the credit risks associated with banking operations. However, available data indicate arise in the value of non-performing loans in recent years. This study therefore focused on challenges of operationalization of credit risk management policies, strategies and implementation in banks. The justification of the study is that some banks could have comprehensive risk management policies and strategies but their implementation might be inappropriate. The research examined critically, the portfolio quality of the bank selected for the study. Again, the credit risk management policies of the bank were analysed with reference to national standards. For in depth analysis, the case study approach was adopted. The study approach was both exploratory and explanatory. The staff of the Credit Risk Management Credit Operations Departments of the bank provided primary data. In addition, secondary data on the bank's loans portfolio was obtained from journals and annual reports. Trend analysis was applied to assess the behavior of some selected variables over period of time.