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Title: The influence of credit risk management strategies on the performance of commercial banks : a comparative case study of UAE and UK commercial banks
Author: Karim, Shahzad
Awarding Body: University of Liverpool
Current Institution: University of Liverpool
Date of Award: 2019
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This study undertakes a comparative investigation of the influence and adoption of credit risk management strategy on the performance of commercial banks in the United Arab Emirates (UAE) and the United Kingdom (UK). The research assesses the uses and approaches to credit risk management in the UAE in comparison to the UK, beginning with a thematic literature review that identified key theories, strategies and principles of the extant credit risk assessment literature, whilst contextualising the distinctiveness of Islamic banking. Adopting a deductive ontological and positivist epistemological position, the research prioritised an 'action research' design that used both quantitative and qualitative data within a mixed methods research design. Using non-probability convenience sampling, primary data was first collected from 100 middle-level bank managers (50 managers from the UK and 50 managers from the UAE) by means of a self-administered questionnaire. Qualitative data was subsequently collected from 20 top managers (10 managers from Emirati banks and 10 managers from UK banks) through semi-structured interviews. From the analysis of this data, 18 key variables were identified and defined across three categories: credit risk management strategies, factors influencing risk management and commercial bank profitability. This research contributed to the limited literature on credit risk management in conventional versus Islamic banks, and the research findings present a novel comparative analysis of the differences between UK commercial banks and Emirati financial institutions and two key differences were identified. First, the results showed that Emiratis banks prioritised financial statement analysis and credit score analysis in their credit risk management, while UK banks prioritised credit portfolio models and exposure limits. Second, in respect to organisational profitability, the Emirati banks implementing creditworthiness analysis and internal ratings to measure their potential credit risks achieve higher returns on equity, compared to those in the UK who use stress testing and exposure limits. The research has policy implications for Emirati financial institutions, such as the exploration and adoption of more profitable risk management strategies and assessment techniques and also provides valuable information to researchers who are interested in understanding the role of credit risk management in organisational profitability in both the conventional and Islamic banking sector.
Supervisor: Rowlands, Hefin Sponsor: Not available
Qualification Name: Thesis (D.B.A.) Qualification Level: Doctoral