1Chapter 5 Understanding Your Financial Statements and Ratios for Risk Management

2009 ◽  
pp. 339-358
Keyword(s):  
Risk Management ◽  
Financial Statements

Liquidity risk management: conventional versus Islamic banking system in Egypt

2017 ◽  
Vol 8 (1) ◽  
pp. 100-128 ◽  
Author(s):  
Nevine Sobhy Abdel Megeid
Keyword(s):  
Risk Management ◽  
Banking System ◽  
Liquidity Risk ◽  
Policy Decision ◽  
Financial Statements ◽  
Decision Makers ◽  
Content Type ◽  
Bank Regulations ◽  
Conventional Banks ◽  
Practical Implications

Purpose This research aims to analyze and compare the effectiveness of liquidity risk management of Islamic and conventional banking in Egypt to ascertain which of the two banking systems are performing better. Design/methodology/approach A sample of six conventional banks (CBs) and two Islamic banks (IBs) in Egypt was selected. Using the liquidity ratios, the investigation involves analyzing the financial statements for the period of 2004-2011. The data were obtained from Bank scope database. Findings The research found that in Egypt, CBs perform better in terms of liquidity risk management than IBs. The liquidity risk management significant differences between IBs and CBs could be attributed more cash availability to CBs than to IBs, in addition, Egyptian Central Bank regulations on capital and liquidity requirements for IBs disconcert IBs’ performance. Practical implications This research facilitates the bankers, academician, scholars and bankers to have an alluded picture about Egyptian banking developments in liquidity risk management. The results can be used by bankers’ policy decision-makers to improve and enhance their consideration for liquidity risk management. Originality/value This research covers a period and a country that compares CBs’ and IBs’ liquidity risk management. Its value is attributed to the increasing differentiation between CBs and IBs.

scholarly journals The Effect of the Financial Crisis on the Jordanian Industrial Sector

2013 ◽  
Vol 2 (1) ◽  
pp. 43-47 ◽  
Author(s):  
Khaldoun Al-Qaisi
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Financial Statements ◽  
Developed Countries ◽  
Industrial Sector ◽  
Financial Data ◽  
Management Policy ◽  
Slight Effect ◽  
Industrial Enterprises ◽  
International Financial Crisis

The International financial crisis caused the recession of the industrial sector in most developed countries. The effect of the crisis in the developing countries was different. This research aimed at investigating the effect of international financial crisis on industrial sector in Jordan. Different financial ratios were estimated using the financial statements of the industrial enterprises for the period 2000-2008. The financial data were classified to two periods. The first period 2000-2005 and 2006-2008 for this purpose. The results show very slight effect on the industrial sector in Jordan results of the limitations of most companies on their activities as a part of risk management policy.

scholarly journals EVALUATION OF THE MACROECONOMIC CONSEQUENCES OF NATURAL DISASTERS AND SUBSEQUENT DISCLOSURES IN THE FINANCIAL STATEMENTS ON THE EXAMPLE OF A CORONAVIRUS PANDEMIC

2020 ◽  
pp. 6-13
Author(s):  
R. Kuzina
Keyword(s):  
Economic Growth ◽  
Risk Management ◽  
Natural Disasters ◽  
Growth And Development ◽  
Financial Statements ◽  
Financial Resources ◽  
Economic Growth And Development ◽  
General Decline ◽  
The Impact

The article reviews the macroeconomic consequences of natural disasters based on the ECLAC methodology, which separates direct physical damage from indirect damage and additional or secondary effects. A study of the impact of natural disasters on long-term economic growth and development has shown that the scarcity of financial resources after a natural disaster reduces future growth and requires the disclosure of risks associated with dangerous natural phenomena for three reasons. Firstly, there are large opportunity costs associated with diverting scarce financial resources into relief and disaster recovery efforts. Secondly, natural disasters can damage an already complex budgeting process. Thirdly, natural disasters place high demands on international aid resources, diverting resources from development. Natural disasters have a negative impact on both the short and long term. These developments refute the somewhat simplistic notion of a general decline in vulnerability to natural disasters as the economy grows. Instead, a more sophisticated perspective needs to be adopted and applied when conducting detailed macroeconomic risk assessments. Based on the results of such assessments, the risks associated with natural hazards should be included in general development policies and plans. Risk management strategies should also reflect the fact that disasters occur in different hazard categories (climatic, geophysical or epidemic) and entail different risk reduction options. It is also necessary to assess the experience gained from specific events and, if necessary, take appropriate action. Disasters can cause policy and institutional innovation changes that ultimately benefit, in some cases, not only in reducing vulnerability but also in supporting economic growth and development: deregulating agricultural investment, applying climate forecasting to reduce the impact of climate variability, financial risk management mechanisms. In order to manage risks and mitigate the effects of natural disasters by informing users of financial statements about possible side effects of the pandemic, the issue of disclosure and recalculation of financial statements was considered to reflect the effects of coronavirus on companies and assess financial risks.

scholarly journals The Impact of Audited Financial Statements on Credit Risk Assessment in the Banking System of Kosovo (Period 2014–2018)

2020 ◽  
Vol 8 (1) ◽  
pp. 119-128
Author(s):  
Albina Kalimashi ◽  
Yllka Ahmeti ◽  
Ardi Ahmeti
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Banking System ◽  
Financial Statements ◽  
Financial Statement ◽  
Credit Risk Management ◽  
Audit Process ◽  
Process Work ◽  
Survey Interviews ◽  
The Impact

AbstractThe main goal of the present research is to address the role and importance of audited financial statements in increasing the efficiency of credit risk management in the banking system of Kosovo. In addition, the research will help users understand the financial statement assurance process and the audit process work for a proper assessment of credit risk by banks. The research is treated in sections as below: the first section includes a review of literature (theoretical and empirical review) related to theoretical concepts regarding the importance and development of financial statement audit at financial institutions, in region and beyond. The second section includes a general overview of the relationship between audit of financial statements of clients that establish financial relations with banks and credit risk management. The third section presents the results of the survey and the confirmation of the formulated hypotheses. The last part of the paper presents conclusions and recommendations that have arisen from our study. The main method during our research has been the use of qualitative/quantitative analysis, which has been carried out during various techniques, among which the main ones are the survey interviews & internal observation of processes based on our own professional experience in the banking channels. The paper aspires to provide a better understanding of challenges in assuring qualitative accounting information for decision-making, as well as presents the basis for further study of this issue in the future. The results of the study aim at adding the value to regulatory bodies’ documents such as politics/strategies/instructions and also setting new rules in regard to credit risk management.

scholarly journals Manajemen Risiko: Deteksi Dini Upaya Pencegahan Fraud

2020 ◽  
Vol 9 (2) ◽  
pp. 107
Author(s):  
Eko Sudarmanto
Keyword(s):  
Risk Management ◽  
Early Detection ◽  
Current Practice ◽  
Management Strategies ◽  
Financial Statements ◽  
Economic Costs ◽  
Fraud Prevention ◽  
The Public ◽  
Management Procedures ◽  
Risk Management Strategies

The economic costs of fraud in financial statements continue to be a problem for organizations and the public. The problem discussed in this study is limited risk management strategies to detect early for the prevention of fraud made by company managers and auditors. This strategy is important for proactive fraud prevention and for the integrity of financial statements in the future. The aim of this multi-case qualitative study is to explore early detection and methods of preventing fraud on financial statements using a conceptual framework of risk management. As a conclusion, there is a gap in the concept of risk management in current practice to detect and prevent fraud, and how the auditor's perspective in creating a proactive anti-fraud model. In addition, with this finding practitioners can develop proactive antifraud risk management procedures, and for auditors can develop early detection guidelines in fraud prevention

scholarly journals Editorial: Getting into risk management and financial sustainability issues

2019 ◽  
Vol 8 (4) ◽  
pp. 4-5 ◽  
Author(s):  
Marco Venuti
Keyword(s):  
Risk Management ◽  
Public Sector ◽  
Operational Risk ◽  
Financial Statements ◽  
Merger And Acquisition ◽  
Financial Sustainability ◽  
Economic Risk ◽  
Public And Private ◽  
Research Areas ◽  
Public Sector Organizations

The forth issue of the journal provides contributions to the exploration of subjects related to different research areas: public and private sectors, merger and acquisition, insurance activity and sustainability. In particular, the issues dealt with concern: economic risk, operational risk, performance administration satisfaction, efficacy public sector organizations, mergers, financial statements, reinsurance, insurers, solvency, profitability, taxes, financial sustainability and microfinance

scholarly journals Internal Financial Risk Management In Microfinance Companies: A Case Study Of Akuapem Rural Bank, Ghana

2018 ◽  
Vol 7 (5) ◽  
pp. 64
Author(s):  
Rebecca Davis ◽  
Elvis K. Donkoh ◽  
Bernard Mawah ◽  
Blessed Amonoo
Keyword(s):  
Risk Management ◽  
Financial Risk ◽  
Financial Analysis ◽  
Practical Knowledge ◽  
Financial Statements ◽  
Financial Risks ◽  
Microfinance Institutions ◽  
Operational Risks ◽  
Credit Risks

The operations of Microfinance Institutions (MFIs) in Ghana have recently come under serious public scrutiny. This position was fairly caused by Bank of Ghana’s (BOG’s) announcement regarding 70 microfinance companies whose provisional licenses were revoked BOG (2016). This led to the closure of DKM Diamond Microfinance and some other microfinance companies in the country. This worsening circumstance surrounding the microfinance industry calls for the need to provide practical knowledge on the use of financial analysis tools to manage internal financial risks of the microfinance industry. Data from Akuapem Rural Bank (AKRB) financial statements for the period of 2008 to 2015 (refer to appendix) was analysed using regression analysis, descriptive statistics, trend analysis and ratios. It was observed that the profitability of AKRB is greatly influenced by credit risks, bank size, interest income growth and debt-ratio. The study also revealed that AKRB had comprehensive and adequate risk management structures in place in managing its credit and other operational risks.

An examination of US dollar risk management by Canadian non‐financial firms

2008 ◽  
Vol 31 (8) ◽  
pp. 570-582 ◽  
Author(s):  
Alex Faseruk ◽  
Dev R. Mishra
Keyword(s):  
Risk Management ◽  
Financial Statements ◽  
Content Type ◽  
Financial Firms ◽  
Hedging Strategies ◽  
A Value ◽  
Operational Hedging ◽  
Financial Hedging ◽  
Us Dollar ◽  
The Impact

PurposeThe purpose of this paper is to examine the impact of US dollar exchange rate risk on the value of Canadian non‐financial firms.Design/methodology/approachThe sample, from the Compustat database, includes all non‐financial Canadian firms with sales over $100 million. The study segregates firms into hedging and non‐hedging groups and applies statistical techniques to test if hedging enhances value.FindingsThe results demonstrate that Canadian firms that have higher levels of US$ sales tend to use derivatives more frequently through higher levels of US$ exposure. Firms that have both US sales and assets appear less likely to use hedging. Firms with an American subsidiary and use financial instruments to hedge have higher values. When operational hedging is used with financial hedging, it is a value enhancing activity increasing their market‐to‐book by 14 per cent and market value‐to‐sales by 40 per cent. Incremental impact of these two hedging strategies is to enhance value by 7 per cent.Research limitations/implicationsThe sample from Compustat captures large capitalization Canadian firms but ignores about 75 per cent of Canadian firms. There is a bias towards larger firms. Some hedging items are not disclosed on financial statements. A survey would enhance and complement these results.Practical implicationsThe paper finds that it is important for Canadian firms that have exports denominated in US dollars to hedge their exposure. The full value of hedging is reaped by using both operational and financial hedges.Originality/valueThis study is the first that examines US dollar risk management by Canadian firms.

scholarly journals OPTIMIZATION OF INVESTMENTS IN CORPORATE RISK MANAGEMENT

2019 ◽  
Vol 10 (3) ◽  
pp. 220-227
Author(s):  
V. A. Makarova
Keyword(s):  
Risk Management ◽  
Theory Of The Firm ◽  
Mining Industry ◽  
Optimal Investment ◽  
Financial Statements ◽  
Investment Model ◽  
Practical Significance ◽  
Corporate Risk Management ◽  
The Subject ◽  
Corporate Risk

In tIn this article, the problem of optimizing investments in risk management is considered through the theory of the firm and the problems arising from this theory (the problem of the «principal-agent», the theory of contracts). The purpose of this study is the theoretical and empirical evidence of the optimal investment model proposed by the author for corporate risk management. The object of the research is the companies of the metal and mining industry of the Russian Federation. The subject of research are the financial performance and the amount of management expenses of companies. The theoretical significance of the study is in the ability of indirect evaluating investments in corporate risk management based on the company's financial statements. Practical significance is the ability to use the results obtained in the real conditions of corporate governance of the company. The practical significance of the study is the ability to determine the appropriate amount of investment in risk management.

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