Professional Documents
Culture Documents
1.1 Introduction:
The banking sector in Bangladesh presents a vital position for the financial
development of the nation. The principal task of the bank is to generate cash and
cash equivalent in the form of deposits from the public and provide the loan or
different investment who require that based on appropriate evaluation of the
project. The cash is transferable by using checks, draft, different credit/debit card
etc. The purpose of banking is switching cashes from surplus to deficit devices or in
other phases. To attain the research objective, the researcher will be considering a
sample of one commercial bank and financial data of five commercial banks. The
conventional banks are Prime Bank Limited, Southeast Bank Limited, Brac Bank
Limited, Mercantile Bank Limited, United Commercial Bank Limited and AB Bank
Limited. Banks are selected based on the availability of the financial data.
1.2 Research Background
Henry Fayol first introduced the idea of the risk management in 1916. However it
has been formalized later by Russell Gallagher in 1956 when he posted the Risk
Management-a fresh phase of cost control in the Harvard Company where it is
evaluated and debated that the professional insurance Manager ought to be a Risk
Manager. The Noble laureate Harry Markowitz was the primary economic
philosopher to have done the explicit study over the risk management strategies
and portfolio diversification. He connected phrases which includes the arrival and
application by the threat concept.
In todays competitive world credit risk plays a major concern for all financial
institution especially a banking sector. Profitability of the banks depends on an
appropriate credit risk management . Another main reason for selecting this topic is
the risk of liquidity associated with commercial banks, since every bank is now
encountering more crisis of liquidity and finally might also lead to the bankruptcy.
Therefore efficient risk management in the banking sector is the prime aspect to
ensure goal congruence and for the researcher it is a paramount importance for
selecting this topic.