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The Effects of Bad Debts and Credit Risk on Porfolio Management in the Irish Banking Industry: a Case Study of Allied Irish Bank (AIB).

Williams, Michael Olayiwola (2007) The Effects of Bad Debts and Credit Risk on Porfolio Management in the Irish Banking Industry: a Case Study of Allied Irish Bank (AIB). Undergraduate thesis, Dublin, National College of Ireland.

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    Abstract

    This study examined the effects of bad debts and credit risk on portfolio management in the Irish banking industry with particular reference to Allied Irish Bank (AIB). The objectives are examine credit policies and identify the effects of bad Debts on the banker's portfolio management and to examine the effect of the problem-on sound portfolio management. Determine the effectiveness of the measures taken before granting loans and advances. Finally to suggest recommendation for the improvement of system control and procedures and adherence to principles and ethics of managing credit.
    Primary and secondary data were collected. Primary data were collected through questionnaire and personal interview with Credit risk manager, Finance and leasing in AIB, also interview was held with Credit assessment officer, Bank of Ireland, Credit card centre. In the analysis of this work, simple random techniques were used, that is choosing 'from all elements of concerns. In operational measures of variable appropriate statistical formulae of simple percentage and proportion technique was used in comparing, figure. Also Hypotheses were tested from the questionnaire. The research work revealed very useful findings on the deteriorating condition of portfolio management and the wide spread of bad debt in the banking sector despite measure taken by government as well as banks management and financial industry regulator in this regards. It also revealed the causes of bad debt ranging from poor management of debts, poor quality and poor lending decision at initial application stages, poor or inadequate security documentation, and lack of follow-up and monitoring after disbursement. Also inadequate maintenance of accounting records couple with poor assessment of the customer's integrity. Insider's knowledge and abuse of such information on assets portfolio mismanagement. It also revealed that the bank has so far done well in terms of instituting strong debt management machineries which has helped greatly in cushioning down the harsh effects of bad debt on their portfolios. The work concluded with recommendations that are deemed to positively influence the banking sector in the area of portfolio management. These recommendations include amongst others adequate designing of internal control system, its communication and proper implementation, verification of documentation- accepted from intending borrowers by bank's, physical identification and proper valuation of security/ collateral, involvement of the government in the recovery of debt owned to banks and the bank management should ensure professionalism and excellent management of its portfolio devoid of bad debt.

    Item Type: Thesis (Undergraduate)
    Subjects: H Social Sciences > HG Finance > Banking
    H Social Sciences > HG Finance > Credit. Debt. Loans.
    H Social Sciences > HG Finance > Investment > Stock Exchange
    Divisions: School of Business > BA (Honours) in Financial Services
    Depositing User: SINEAD CORCORAN
    Date Deposited: 23 Jul 2010 10:06
    Last Modified: 01 May 2012 15:59
    URI: http://trap.ncirl.ie/id/eprint/343

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