Credit Risk Management in Financial Institutions: A Case Study of Ghana Commercial Bank Limited

Abstract

The purpose of this study is to identify the challenges financial institutions and customers of those financial institutions go through in obtaining credit and loan facilities and their repayment. Financial institutions are increasingly facing credit risk in various financial instruments other than loans, including acceptances, trade financing, foreign exchange transactions, financial futures, options, bonds, equities, swaps and in the extension of commitments and guarantees.. This study uses Ghana Commercial Bank as a case study with particular reference to the Risk Department.  Credit risk management in a financial institutions starts with the establishment of sound lending principles and an efficient framework for managing risk. Policies, industry specific standards and guidelines, together with risk concentration limits are designed under the supervision of risk management committees and departments.  The findings may be useful in strengthening the credit practices of Ghana Commercial Bank Limited and other financial institutions in the country Ghana.

Keywords: Credit risk management, financial institutions, financial instruments