CHAPTER Eight

CONCLUSION and RECOMMENDATIONS

CHAPTER CONCLUSION AND RECOMMENDATIONS
EIGHT

8.1 INTRODUCTION.

8.2 SUMMARY OF STUDY .

8.3 FINDINGS OF THE STUDY.

8.4 RECOMMENDATIONS.

RECOMMENDATIONS NEED ATTENTION OF YEMEN

8.4.1
BANKS.

8.4.2 RECOMMENDATIONS NEED ATTENTION OF INDIAN

BANKS.

SIGNIFICANCE OF THE RESEARCH

8.5

8.6 SCOPE FOR FURTHER RESEARCH

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 CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

CHAPTER-8
CONCLUSION AND RECOMMENDATIONS

8.1 INTRODUCTION

This chapter attempts to provide a summary and discussion of the findings of this
study in the light of the available studies and literature. In addition, the implications of
the findings and the overall limitations of the research process will be highlighted.
Some recommendations for decision makers and researchers are also provided at the
end of this chapter.
According to the plan of the research, the obtained data from primary and secondary
sources was analyzed in the previous chapter and was observed that there is major
differences in risk management level of private sector banks of Yemen and India. A
survey was also executed to evaluate the issue of risk management practices in
private sector banks of Yemen and India based on the mentioned objectives and
questions of the research.

8.2 SUMMARY OF STUDY

The present study has focused on comparison of risk management in private sector
banks of Yemen and India in practices of risk and credit risk. The study is divided
into two parts, I). theoretical and II). empirical. The theoretical part is described in
FIVE chapters: introduction, Review Of Literature, Banking Sector of Yemen and
India –An Over View, Conceptual Analysis of Risk and Risk Management, Credit
Risk Management in private sector banks of Yemen and India. The major part of the
present study is empirical in nature which comprises three main chapters depend
directly on primary data of survey and indirectly on the secondary data that were
collected through the questionnaire. The empirical work of this study focused on
credit risk management practices in private sector banks in Yemen and India, to
understand the credit risk management, to identify of risk management. The
empirical study carried out a survey of credit risk management department managers,
employers, credit risk management officer in privet sector banks of Yemen and India.
The empirical research comprises three chapters, preparation of final questionnaire
with research methodology, analysis of data obtained from questionnaire, and
conclusion and suggestion.

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 CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

Chapter One : Researcher has presented the introduction on the study, statement of
the problem, significance of the study, objective of the study, hypotheses of the
research, Scope of the research, Research methodology which contain on primary and
secondary data source and sampling of study, Research instrument used and
structure of the research.
Chapter Two : in this chapter researcher has presented a review of literature of
historical background of the studies and its provides an overview of various areas
related to the research questions, as well as a theoretical background for the
hypotheses development. this chapter consists of three parts; the first part describes
the literature review in Indian perspective and the second parts describes the
literature review in Yemen perspective and third parts describe the literature review
in international perspective.
Chapter Three : Researcher has explained in this chapter to present an overview of
the Private Banking Sector in Yemen and India . It consist of two sections At the
outset the first section describes Private Sector Banks In Yemen. Later a description
of the Private Sector Banks In India in the second section. is presented introduction,
definition of banks, the stage location of Yemen, stage banking scenario and history
banking in Yemen , brief over view of classification of Yemen according to the
activity , according to the form , according to nationality and according to number of
branch. dwelling upon the organization of the banking sector, banking credit extended
in the form of loans and advances as also the other functions and services rendered by
the banking sector in Indian and Yemen. Islamic banks and its background. And
Yemen banking system, Yemen banks profile for international banking of Yemen
(IBY),Yemen commercial bank(YCB)and Yemen Kuwait bank (YKB). In the section
tow the section Private sector banks in India presented introduction on Indian banks,
history of Indian banking system, Type of Indian banks, structure of Indian banking
system, place of private sector banks in India, Indian banking profile of industrial
credit and investment corporation of India (ICICI) bank, Housing Development
Finance Corporation Limited (HDFC) Bank, AXIS (UTI) BANK.
Chapter Four : Researcher has devoted in this chapter to present Conceptual
Analysis of Risk and Risk Management. It consist of two sections first section it
presents introduction on risk , background and historical of risk, concept of risk,
classification of risk and second section presents background and evaluation of risk

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 CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

management , risk management process, policy and strategy, The Bank's Risk
Management Envisages, and challenges.

Chapter Five : Researcher has explained Credit Risk Management in private sector
banks of Yemen and India. It presents introduction , concept of credit and credit risk
in banks need to manage credit risk, credit risk management, goal of credit risk
management, need of credit risk management in banks, factors effecting credit risks,
Basel accord and credit risk management…..

Chapter Six : Researcher has described the Research Methodology that are used to
attain the objectives of the research . which is includes research strategy, population
and sampling of study ,Data collection methods which include primary and secondary
data, Period of the study, Research instrument of questioner Design, instrument of
reliability and validity, Analysis Techniques and Statistical tools used for analysis
which are Descriptive statistics analyses, frequencies, percentage, Cranach’s alpha
method and Independent Tow samples T–test.

Chapter Seven : Data analysis and interpretation

This chapter is consisting of Data analysis and interpretation of the questionnaires.
The researcher has conducted surveys to a sample of 250 potential respondents from
both countries 210 surveys were conducted of which returned: 200 were usable 110
questionnaires were received from Yemen sample and 100 were usable, while 110
questionnaires were received from Indian, 100 of which were usable. The total
number of usable responses was 200 with percentage 80% which is acceptable.
Participants in this study were risk and credit risk management department chief
manager, managers and employees of private sector banks in Yemen in (Sana'a
district) and India in (Jalgaon district).
The questionnaires was divided into two parts, Frist part is: Demographic
characteristics or Profile of respondents. It’s contained a general information of the
population and sample’s respondents in terms of age level, educational level, gender,
Specialists, Occupation and Employment, Experience in credit risk management field
in banks.
Second part is: Data Analysis. This part focuses on the , Arithmetic Means and
Standards Deviations for the samples' respondents to determine their attitudes

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 CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

regarding questionnaires items. It contained on four field and testing the hypotheses.
Techniques and Statistical tools used for analysis which are Descriptive statistics
analyses, frequencies, percentage, Cranach’s alpha method and Independent Tow
samples T–test. For data analysis and interpretations.

Chapter Eight : Finding and Conclusion and Recommendations

This chapter attempts to provide a summary and discussion of the findings of this
study in the light of the available studies and literature. In addition, the implications of
the findings of the research process will be highlighted. Some recommendations for
decision makers are also provided at the end of this chapter.
Conclusion : summary of all chapters
Thus researcher has found some of problem

8.3 FINDINGS OF THE STUDY

Through what was presented in the chapters of the search, and the results achieved,
the researcher concludes a series of recommendations, together constitute the
methodology for the development of risk and credit risk management operating in
Yemen and India banks according to the modern management of banking risks, based
on the above mentioned analysis, the following are major findings of the study the
findings obtained: The characteristics of the respondents approached for survey in this
study are as follows :

 According to the age level , the results indicate that those who are below 30
years old make up the highest percent of banks' respondents in Yemen (79%)
while also that those are below 30 years old make up the highest percent of
banks respondents in Indian banks (60%).
 According to the Education level, the results indicate that the most of the
research sample are university graduates in Yemen and India (79%,70%)
respectively from Bachelor Degree.
 With respect to the Gender, Results indicate that Yemen women are to some
extent more active in this field than their encounters in India by (30%,21%)
respectively.

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CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

 According to the Specialist, the results indicate that the majority of Yemen
respondents was of the accountancy specialist by (62%), while the majority of
Indian respondent was Business Administration Specialist with
(47%).Therefore, the result can be trusted to same extent in the banking.

 According to the level of experience, the results indicates that the majority of
respondent of Yemen and India respondents who had worked in credit risk
field is 1-5 years of experience was by (68%,57%) respectively.

 According to Sample's Responses Regarding the first Field, the results indicates
that The total mean score of Yemeni banks has reached (3.923) with a standard
deviation (.4762), while the total mean score was in Indian banks (4.160) with a
standard deviation (.5620), when the significance level calculated (.001), which
is smaller than the significance level adopted (p<0.05), Which indicates to
“There are significant differences between Yemen private sector banks and
Indian private sector banks in practices of risk and credit risk management.”

 According to Sample's Responses Regarding the second Field, The total mean
score of Yemeni banks has reached (3.633) with a standard deviation (.4134),
while the total mean score was in Indian banks (3.779) with a standard deviation
(.4899) when the significance level calculated (.024), which is smaller than the
significance level adopted (p<0.05), which indicates to “There are significant
differences between Yemen private sector banks and Indian private sector
banks in Understanding of risk and credit risk management.”

 According to Sample's Responses Regarding the third Field, The total mean
score of Yemeni banks has reached (3.628) with a standard deviation (.7398),
while the total mean score was in Indian banks (3.885) with a standard deviation
(.7772) when the significance level calculated (.017), which is smaller than the
significance level adopted (p<0.05), That’s means to “There are significant
differences between Yemen private sector banks and Indian private sector
banks in Identify Risks and credit risk management.”

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CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

 According to Sample's Responses Regarding the fourth Field, The total mean
values of Yemeni banks has reached (3.995) with a standard deviation (.7586),
while the total mean was in Indian banks (4.135) with a standard deviation
(.7658) and the mean difference between the two countries (-.17196) when the
significance level calculated (.196), which is greater than the significance level
adopted (P>0.05), which means to there are no significant differences
between Indian banks and Yemen banks in the level of the usefulness of
coordination between the government sector and the community in the risk
and credit risk management system.

 There are an agreement between the Yemeni banks and Indian banks with
regard to the lack of staff in risk credit risk management departments, ignoring
that both these two departments of the most important departments, and
therefore it has to create a sufficient number of employees and the division of
labor on the basis of competence, and not to rely on the integration of many
different tasks desire to reduce expenses and salaries.

 Different backgrounds of each group to the economic and financial issues and
due to the length of the work and size and experience of Indian banks compare
the relative modernity of the Yemeni banks and lack of experience. indicate that
there is “There is statistically significant differences between the private sector
banks of Yemen and private sector banks of India in practices and
understanding and identifying of risk and credit risk management.

 It was found that, there are no statistically significant differences between the
Yemeni banks and Indian banks differences in approaches which adopted by
bank, that indicate to most of Indian private sector banks as well as Yemen
private sector banks believe that the standard approach is most appropriate for
their purpose.

 It was found also that, the financial statements of India banking more than the
financial statements Yemen banking as they disclose more information about
their financial statements for their users which led the users trust their financial
position more than the Yemen banking who gives less disclosure.

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CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

 There is growing awareness among banks, of the need for training. But none of
the banks has a training policy defining the objectives of training programmes.
There is no formal system of identifying training needs, grouping trainees
according to training needs and evaluation of effectiveness of training. Post
Training placement is also a neglected area.

 It was also found that, board of directors is responsible for approval and
developing of credit risk management policies and authority for credit risk
policy depends on the ownership pattern of the banks resultantly senior
management is not given responsibility for credit risk management.

 Deteriorating political and economic conditions in Yemen resulted in an

increase in the percentage of defaulting on the provided credit and increasing in
credit risk at all Yemeni banks.

 Risk rating techniques, followed by credit approval authority; prudential limits

and loan review policy are found in use by the maximum banks in India.
 It was found that, the countries differ in some dimensional aspects of risk and
credit risk management practices and share some practices to an equal degree.
The similarities and differences in the risk management practices in private
sector banking between Yemen and India could be due to numerous factors,
such as historical issues, level of development of banking in the two countries,
and norms and values, tradition that operated by two countries and extent of
controlling of central bank and the government to the policies of banks.

 Most of the banks favored credit rating and information services of India Ltd.
CRISIL's (Credit Rating) model and internally designed models and 85% of the
banks have favored and followed standardized approach of credit risk.

 Indian banks efficiently manage credit risk in compare with Yemen banks, and
This corresponds with the study of Swaranjeet Arora, (2013) in Analyzing
Credit Risk in Indian banks.

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 CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

 The analysis shows that more bankers cover only credit risk by using simple
methods, it represent need of study to develop other kind of risk analysis
methods in sector banks of India. NAJAF, Gharachourlou Aghjelou,(2007)

 The findings simply reveal relative comparison between India and Yemen in
risk and credit risk management in private sector banking, with India leading in
terms of practices of risk and credit risk management, understanding risk and
credit risk management, identification of risk and credit risk management ,
while Yemen leads in the area of identifying of risk and credit risk
management. There are no significant differences between Indian banks and
Yemen banks the usefulness of coordination between the government sector
and the community in the risk and credit risk management system. Overall, the
results provide evidence of efficiency in risk management practices within the
private sector banking in India and Yemen.

Summary And Conclusion Of All Chapters

The aim of credit risk management is to reduce the probability of loss from a credit
transaction and implement the practices of risk management in a good manner , thus
it is needed to meet the goals and objectives of banks. Thus researcher has found
some problem regarding to credit risk management practices in India and Yemen this
has lead into low level of efficiency , operations and profitability and increase the
probability of loss from credit transactions of private sector banks in Yemen and India
. If we want to improve the level of efficiency, operations, profitability and practices
of risk management and reduce the probability of loss from a credit transaction of
private sector banks of Yemen and India researcher has suggested some
recommendations in the following manner

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 CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

8.4 RECOMMENDATIONS

Researcher has made some recommendations to improve credit risk management

practices for the development of risk and credit risk management systems operating
in Yemen and India banks according to the modern management of banking risks, in
the following manner:
8.4.1. RECOMMENDATIONS NEED ATTENTION OF YEMEN BANKS

 The management should review and updating credit risk rating whenever
relevant new information is receive

 Banks must ensure the existence of a specialized Department of credit risk

management, working to identify, measure and monitor credit risk, and the
efficiency of the treatment and the face of these risks tools.

 Higher risk credit should be reviewed and analyzed more continuously, and
higher risk borrowers normally should be contacted continuously
 Urged Yemeni banks commitment to reduce capital requirements according to
Basel resolutions because of its role in the international acceptance of the
Yemeni banks and by raising their capital or to merge with each other.

 Working to complete the requirements of Basel I and to start implementing the

Basel II requirements.

 The Banks risk management should go in for new areas for lending to minimize
risk and its returns. Lending loans to service sector like all type of educational
institutions real estate and property builders.
 Risk management software is expensive and its needs from Yemen private
sector banks to send staff abroad to train in such systems.

 Urged Yemeni banks to develop sound policies to attract investment and

savings through the introduction of modern means and tools in which to invest
and work to earn the public's trust in them.
 Yemeni banks which are working to raise employment rate compared to
deposits, or total resources in more investment returns, and reduce employment

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CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

in highly liquid assets as is happening now. As this has a role in community

service, and attract more number of customers. In contrast, the state must play
its role in the application of the law of the debtor is a procrastinator to fulfill its
financial obligations.
 Yemen banks should put investment policies that, take into account between
the duration of the employment of money and deadlines get the money. To be
the focus of employment on the financing and lending to the important
economic sectors of agriculture and industry in the country and not limited only
to the trade sector.

 The researcher recommends conducting more research on risk management and

sound banking practices for managing liquidity risk, operational risk and market
risk and the risk of financial derivatives in banking institutions.

 As the Yemen is developing country, Yemeni banking sector is small in

comparison with the Indian banks on the banking sector , researcher recommend
to encourage to merge the Yemeni banking to frame, strength and increase its
capital to fund new development project of banking in Yemen and facing its
risks and obligation of the credit risk .
 The Yemeni banks managements should care about the banking risks through
forming special management and qualified staff for dealing with risks and to
improve their level and to give them more authority to make their decisions.
And convey their recommendations about risk management to the top
management.
 Top management of Yemen banks should provides a continuous support
embrace effective cooperation and coordination with Risk Management
departments in order to ensure achieving their duties properly using a scientific
approach in assessing the Risk Management procedures.
 Yemeni banks must employ their resources on community service and reduce
investment that money abroad.
 Work to establish a stock market in Yemen, As this has a role in the ability of
banks to invest its funds in semi-liquid assets which generate a profit, and not to
keep them in their vaults, with the ability to sell them quickly when you need to
cover liquidity requirements.

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CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

 A risk management system in Yemen banks should be developed for reporting

risks in time and there should be quick disposal of cases of risks within time.

 Work to ensure cooperation, coordination, and integration between the Yemeni

banks among themselves and among other international banks in the form that
leads to some banks rely on others As this has a role in the success of the banks,
as the success of the banking business requires the presence of a large network
and various parts of the banks spread around the world.

 It’s vital to hold specialized training courses in risk management, in order to

train and enhance the employees in dealing with the expected risk and to face it.
and the application of the Basel 2 standards, modern methods for measuring
banking risks, and in particular to measure credit risk. These courses should be
comprehensive for all staff in risk management to increase their efficiency and
awareness concerning the negative effects of risks and its impact on the bank.
 The development of human resources in the banks in the areas of financial
analysis and risk management, banking and the continuing education and
training, particularly in the areas of internal rating systems for credit and
determining capital adequacy and methods of measuring and reducing credit
risk in the Basel 2 accord.
 The credit policies of banks are compatible with changes in economic
conditions, both in the economy as a whole, or in certain sectors. Especially that
the investment environment in Yemen is characterized by political and
economic fluctuations, which increases the expectations of credit risk in banks.

 Make the working commercial banks in general, to take great importance in the
external and internal environment factors, and using the financial performance
indicators in measuring its strategic risks.
 The owned funds of banks need to be strengthened for a strong capital base .
this can be achieved by increasing the membership and merge the banks to rise
the share capital this banks .
 The internal risk rating system in the banks should be dynamic rating should
change when risk changes.

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CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

8.4.2. RECOMMENDATIONS NEED ATTENTION OF INDIAN BANKS

 The banks supervisor should identify the problem banks and monitor the
behavior of troubled banks to prevent failure or to limit losses. A broader
system and control mechanism should be developed so that a seamless
paradigm for corrective actions can be put place for major deficiencies in bank
functioning.
 Every bank should develop its own risk management system based on risk
parameters.
 A risk management system in Indian banks should be developed for reporting

risks in time and there should be quick disposal of cases of risks within time.

 Every bank should strengthen its existing credit administration department. The
department should have professionally qualified persons.
 The management should review and updating credit risk rating whenever
relevant new information is receive
 Every bank should put in place proper credit risk management policies, process,
procedure. Banks should look at cash flow of the borrowers ,instead on their
assets size.
 Every banks should also have dedicated early warning system or risk
management department. The task of department should be to provide early
warning signal regarding credit risk , default risk etc.
 The management should care about the banking risks through forming special
management and qualified staff for dealing with risks and to improve their
level and to give them more authority to make their decisions. And convey their
recommendations about risk management to the top management.
 Indian private sector Banks are largely Basel II compliant. However, they are
still in applying the Standardized Approaches in terms of capital computations
under Pillar I. It will be in their interest if its starts implementing the Advanced
Measurement Approach, which is more risk sensitive and which would entail
lesser capital provisioning. To achieve this objective, Banks should improve
their spending on IT systems and attempt to improve and train and re-skill their
personnel as a prelude to successful implementation of the Basel Accord
Advanced Approaches.

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 CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

 The need to improve the strength of financial system in the financial institutions
BASEL accord required implementation I,II,III, effectively
 Reserve bank of India should monitor carefully the policies and practices of
loan and interest rates margin as some banks are charging very high in the name
of risk coverage.

8.5. Significance of the Research

As Credit Risk Management is a burning issue of 21st Century every private sector
banks in global economy will have to adopt credit Risk Management strategy to
improve their efficiency, productivity and profitability. Considering this aspect
significance of this research would be very much useful for the improvement of
financial performance of the banks and overall development of the economy in
following manner:-

 Recommendations made by the researcher are specific dynamic and innovative

which will be new additions to the literature regarding Credit Risk Management.
 It will be useful to know the weakness and strengths of such banks using risk
management practices in India and Yemen
 This study will provide useful inputs to find out the current position of private
Banks in comparison to Yemen and India .
 It will be used as an input for further studies.
 It will be useful for financial institution by providing information in risk and
credit risk management.
 This research will be useful to the researcher for getting Ph.D. Degree of North
Maharashtra University , Jalgaon , India.
 This research will be useful to the Government of India and Yemen in framing
Credit Risk Management policy for private sector banks in India and Yemen.
 Last, but not the least, this research work will be useful as an important Guide-
Line to the researchers pursuing their research in the area of Credit Risk
Management.

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 CHPTER EIGHT: CONCLUSION AND RECOMMENDATIONS

8.6. Scope for Further Research

There are many risks that Banks and financial corporation faced ranging from
financial risk, industry, securities risk market risk interest risk operational risk,
business risk , inflation risk, to credit risk . in this study only attempt to cover credit
risk management practices in some of banks of Indian and Yemen banks . no other
risks are studied, hence there is huge scope to conduct a research on over all risks and
another banks in an integrated manner. in addition in order to corporation the other
risks with other corporation can be undertaken on the basis of primary and secondly
sources of information. Therefore, there is a great scope for future research in the field
of credit risk management in global economy.

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