Credit risk management strategies and performance of standard chartered bank, kenya

Abstract

Credit risk has always been a vicinity of concern not only to bankers but to the entire business world because the risks of a trading partner not fulfilling his obligations in full on due date can seriously jeopardize the affairs of the other partner. The objective of the study was to determine credit risk management strategies and performance of Standard Chartered Bank, Kenya. The study used a case study design to achieve the objective of the study. The main advantage of a case study was that it provided a good understanding of a certain phenomenon. The study utilized primary data which was collected through an interview guide that had broad open ended questions. The data obtained from the interview guide was analysed using content analysis. This approach was more appropriate for the study because it allowed for deep sense, detailed account in changing conditions. Thus the qualitative method was suitable for this research because this research was conducted within the environment where the credit risk management strategies are applied and the impact of the same felt. The findings of the study were that the strategies used by standard chartered bank to control credit risk were: establishing an appropriate credit risk environment; operating under a sound credit granting process; maintaining an appropriate credit administration, measurement and monitoring process; and ensuring adequate controls over credit risk. The study also established that the assessment methods used by standard chartered bank in measuring credit risk included the risk assessment and approval procedures. The study concluded that Standard Chartered Bank review and controls credit risk by using risk avoidance which involves actions to reduce the chances of particular losses from standard banking activity by eliminating risks that are superfluous to the institution's business purpose. The study recommended that credit risk monitoring and supervision efforts should be intensified by the bank. The bank should ensure that credit officers perform periodic follow-ups on borrowers to ensure that loans are used for the intended purpose.