Credit Risk Management and Profitability in Commercial Banks in Sweden

Powerful Essays
Credit Risk Management and Profitability in Commercial Banks in Sweden

Ara Hosna, Bakaeva Manzura and Sun Juanjuan

Graduate School
Master of Science in Accounting
Master Degree Project No. 2009:36
Supervisor: Inga-Lill Johansson

Acknowledgements
After several months of hard work our thesis has been finished. Now it is time to thank everyone warmly who provided their kind assistance to us. First of all, we would like to thank our supervisor Inga-Lill Johansson, Associate Professor of our University, for her guidance all through our work. We would like to thank Andreas Hagberg, PhD Candidate, as well for giving us his constructive suggestions. We are grateful to Johan Sjömark, Credit Risk Control Department officer in Swedbank, for providing us helpful interview by using his wealthy knowledge in credit risk management area. The same appreciations are given to the risk management department in
Swedbank, for arranging this interview. Furthermore, we would like to direct our appreciations to our opponent groups for providing us useful feedbacks. Last but not least, we are thankful to Eva
Gustavsson and Wajda Irfaeya from Gothenburg University for facilitating us regarding the statistical analysis.
We also would like to express our thanks to IT and Library Services of the School, for providing professional software programs, books and databases. Without them, our thesis would not be finished. The dearest appreciations are directed to our families and friends, for giving us great support and help during these months. Special thanks to Sevara for being patient and “compassionate” to her mommy. Gothenburg, 24th of May 2009

______________________ __________________________ ___________________________
Ara Hosna
Bakaeva Manzura
Sun Juanjuan

ii

Abstract
Credit risk management in banks has become more important not only because of the financial crisis that the world is experiencing nowadays but also the introduction of Basel II.



References: Briscoe. A (2001) The regulation of banking in Europe pp.156-161 Bryman, Allan., Bell, Emma Gerhard. S (2002) Risk management and value creation in financial institutions Illustrated edition, Published by John Wiley and Sons pp Jean-Charles Rochet (2008) Why Are There So Many Banking Crises? Princeton University Press Joël Bessis (1998) Risk Management in Banking Joetta Colquitt (2007) Credit risk management: how to avoid lending disasters and maximize earnings 3rd edition pp.144 Barrow M. (2001) Statistics for economics, accounting and business studies. Harlow, Published by Financial Times Press pp Waymond A Grier (2007) Credit analysis of financial institutions 2nd Edition, Published by Euromoney Books pp.197 study of UAE national and foreign banks. The Journal of Risk Finance, vol. 8 No. 4, pp. 394-409 Blum, Jurg, 1999 Brewer III E., Jackson III E. W.,(2006) A note on the ‘‘risk-adjusted’’ price–concentration relationship in banking. Journal of Banking & Finance, 30, 1041–1054 Demirguc¸-Kunt, A., & Huizinga, H Du Julan, (2004) Legal Institution and Financial System Orientation, Chinese university of Hong Kong. Economics Letters, Vol Englund P. (1999), The Swedish Banking crisis: Roots and Consequences, Oxford review of Economic Policy, Vol. 15, no.3, pages 80-97 Ergungor Emre O., (2004) Market- vs Foong Kee Kuan (2008) Return-on-equity ratio can show how efficient banks are. Malaysian Institute of Economic Research Gerhard. Schroeck (2002) Risk management and value creation in financial institutions Illustrated edition, Published by John Wiley and Sons pp Goddard, J., Molyneux, P., & Wilson, J. O. (2004). The profitability of European banks: A cross-sectional and dynamic panel analysis Jeitschko, Thomas, Jeung, Shin Dong, 2005. Incentives for risk-taking in banking: A unified approach. Journal of Banking and Finance Vol 44 John.Karr (2005) Performance Measurement in Banking: Beyond ROE Journal of Performance Management economy, Vol. 106, pp. 1113-1155. Mason, S.P., (1995). The allocation of risk. In: Crane, D.B., Merton, R.C., Froot, K.A., Bodie, Z., Mason, S.P., Sirri, E.R., Perold, A.F., Tufano, P Naceur S. and Kandil M (2009), The impact of capital requirements on banks’ cost of intermediation and performance: the case of Egypt, Journal of Economics and Business, Vol Petersson J., Wadman I. (2004) Non Performing Loans: The markets of Italy and Sweden. Department of Business Studies, Uppsala University. Purda D Lynnette (2008) Risk perception and the financial system. Journal of International Business Studies, Vol. 93, pp Sylla Richard, 2003, Financial System, Risk Management, and Entrepreneurship: Historical Perspective. Japan and the world economy, Vol Thakor V. Anjan, (1996) The design of financial systems: an overview. Journal of Banking and Finance, Vol. 20, 917-948 VanHoose D. (2007), Theories of bank behavior under capital regulation, Journal of Banking and Finance, Vol. 31, 3680-3697 Wahlstrom G (2009), Risk management versus operational action: Basel II in a Swedish Context, Management Accounting Research, Vol Anerson. D.R & Sweeney. D.J & Williams. T.A (2008) Statistics for business and economics, 10th edition, Fdistribution Table. pp.928. Banks in Sweden(2004) Facts about the Swedish banking market Basel Committee on Banking Supervision Basel Committee on Banking supervision (2001) The New Basel Capital Accord Basel II (2006) International Convergence of Capital Measurement and Capital Standards, A Revised Framework Joe Nocera, “Risk management and financial crisis”, Herald Tribune, January 4, 2009 Riksbank Financial Stability Report (2002), ”The major Swedish banks in an international comparison”, Issue 1 November 2008 Wahlstrom G., 2009, Risk management vs

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