Performance of banks in credit risk management Essay

Appraisal of Performance of Banking in Credit Risk Management

Chapter 3: Research and Methodology

3.1 Research Design

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Research design is specific research methodological analysis, doctrines and techniques used to accomplish the aims of the survey. It encompasses doctrines and techniques used in taking alternate research methodological analysis and technique issues, beginnings of informations, trying program and methods of informations aggregation and analysis. The research attacks and methods of informations aggregation and analysis that were used in this survey are discussed in the undermentioned sub-sections.

3.2 Research Approaches Used in the Survey

There are three alternate schemes of enquiry: qualitative, quantitative and assorted attacks. In order to accomplish the research inquiries stated in the old subdivision, both qualitative and quantitative attack were used in roll uping and analysing informations. The choice of one over the other attack for the behavior of the survey is based on the research job.

3.3 Sample Population and Sampling Techniques

3.3.1 Sample Population

Mauritius is a little island in the Indian Ocean and inborn a bank-dominated financial economic system at the clip of Independence in 1968. However, during the twelvemonth 1968 as compared to tonss of developing states particularly in the African part, the Mauritian Financial system was rather established with 11 Bankss. Mauritius has been good developed from Independence and the Mauritanian Banking Industry now consist of of 21 Bankss, of which 6 are local Bankss, 10 are foreign subordinates, 1 is a joint venture and 4 are subdivisions of foreign Bankss. All Bankss in Mauritius have been incorporated as the survey population. All the Bankss in Mauritius are registered by the Bank of Mauritius to execute banking concern locally and around the Earth.

3.3.2 Sampling Size

Out of the 21 Bankss in Mauritius, Five Bankss were approached in this survey.

A sample of these Bankss in Mauritius are selected utilizing purposive sampling in the sense that the survey was choose a sample believed to present the best information sing the public presentation of selected fiscal establishment in recognition hazard direction peculiarly information in relation with Loan Repayment public presentation, indirect rating and security certification, recognition expense pattern, recognition monitoring system, care of recognition files and designation of fiscal place and concern conditions of borrower and other related information to the survey country. However, those Bankss which are established in early clip usually supply more comprehensive and organized informations of information on the survey country.

The Five selected Bankss are listed as under and have taken in to consideration being the top taking Bankss in Mauritius except for the 5th 1. The 5th one is selected purposively being an International Bank.

Table 1: List of Selected Banks


Banks Name

Year Established

No of Branchs

Market Share


Mauritius Commercial Banks Ltd



40 %


State Bank of Mauritius Ltd



25 %


Barclays Bank PLC



13 %


Hong Kong Shanghai Banking Corporation



9 %


State Bank of India ( Mauritius ) Ltd

3.3 Methods of Data Collection

Research methods are the technique used to roll up informations. In this survey, assorted methods attack was used, which are employed at the same time in roll uping and analysing informations. However, there are different tools available to roll up the needed day of the month including questionnaires, observation, interview, and papers analysis. For this survey, quantitative ( study ) and qualitative ( semi structured interview and papers analysis ) has been applied and are discussed in the undermentioned sub-sections.

3.3.1 Quantitative facet: Survey

The study design is a research method that will provides quantitative or numeral description of tendencies, attitudes or sentiment of participants with the purpose of generalising from a sample to a population. Furthermore, the studies will roll up informations at a specific point in clip with the purpose of depicting the nature recognition hazard direction systems, or determining criterions beside which present conditions can be compared, or finding the relationships existed between specific events like for illustration:

  1. Board Oversight in Credit Risk Management
  2. The Institution’s Credit Risk Management Strategy
  3. Duty of Senior Management of the Institution’s in Policy Designing of Credit Risk Management
  4. Responsibility of Credit Risk Management Committee ( CRMC )
  5. Responsibility of Credit Risk Management Department ( CRMD )
  6. Appraisal of Risk Profile of the Customer/Transaction
  7. Recognition Risk Monitoring and Control
  8. Recognition Hazard Analysis

The studies that will be carried out, has its ain strengths and failings. The strength that the study will convey to this survey is as follows: studies are extremely flexible ; secondly a broad scope of research will be covered, depicting how recognition hazard in Bankss is being managed at present and easy to vouch answering namelessness, i.e for illustration questionnaire will take to more honorable replies. This study will assist to ease to generalise the findings and is efficient in garnering big sum of informations at sensible low cost and attempt.

The restrictions that the study can do is that it is hard to come to deeper apprehension of procedures and contextual differences through questionnaires, if it is standardized and limited in length and deepness of responses.

However, therefore the study can be considered as an appropriate quantitative attack for depicting the managing of recognition hazard in Bankss. Survey Instruments

Survey instrument usually includes self-administered questionnaire, structured interview and structured observations. In this survey, questionnaire is traveling to be widely used and is a utile instrument for roll uping study information. The study will supply structured information, will be administered on its ain and is relatively consecutive frontward to analyse. Therefore questionnaire as a tool for roll uping informations has its ain advantages and restrictions. The questionnaire will profit this survey because the information that will be obtained will be

  1. Efficient,
  2. Reliable because of anon. ,
  3. Honest,
  4. Economic in footings of clip,
  5. Consistent ( i.e small range for prejudice ) ,

The jobs that can be encountered with the questionnaire is that

  1. Non flexible ( no longer possible to turn back one time the disposal stage in under manner ) ,
  2. Lack of qualitative deepness,
  3. Low response rate,
  4. Inability to countervail a deficiency of sufficient informations or an mistake in the graduated table used

Different types of questionnaire can be selected, from extremely structured inquiries ( closed ended ) to unstructured ( unfastened ended ) . However structures questionnaire is more appropriate to garner straightforward information and unsophisticated information because it is easy to sort and quantify. Thus it requires less clip and attempt and is easy to reply. But in the other manus, it is boring and clip devouring to fix inquiries. The figure of responses is nevertheless limited to fix the stopping point ended questionnaire. In add-on, the respondents will hold no opportunities to show their ain positions, and to measure up, develop or clear up their ain replies.

However, unstructured questionnaire gives a greater overview and apprehension of the subject being studied. But it may be hard to sort and quantify and must be carefully interpreted. Therefore, the usage of both structured and unstructured questionnaire has its ain strength and failings. To get the better of the restrictions of both types of questionnaire, semi-structured is a considered to be a powerful tool.

However due to researcher experience and other persons experience in our state that most of respondents are non voluntary to reply unfastened ended inquiries, structured questionnaire are more dependable and are being used for study informations aggregation.

The questionnaire are distributed to 60 purposively selected employees of selected fiscal establishment specifically to those employees that are considered of holding better apprehension and cognition about recognition hazard direction pattern ( i.e Loan directors, recognition analyst, subdivision directors, loan officers, subdivision director, operation director ) .

The questionnaires are distributed every bit to five selected Banks in Mauritius. That is 12 questionnaires are distributed to each selected fiscal establishments.

3.3.2 Qualitative facet: Semi Structured Interview and Documentary Analysis

Qualitative research is used to depict or explicate what is go oning within a survey country. Qualitative method chiefly includes three sorts of informations aggregation: in-depth interview, direct observation and written paperss. For this survey, information was collected through semi-structured interview and documental analysis. Semi-Structured Interview

Interview is considered as a purposeful treatment and/or conversation between two or more people, and helps to roll up lawful and consistent informations that are appropriate to accomplish research inquiries and aims. Interviews can be structured utilizing standardised inquiries for each respondent, semi-structured and unstructured conversations. Structured interview uses a pre-established inquiries, asked in a pre-determined order, utilizing a standard manner of bringing.

On the other manus, unstructured interview efforts to pull out information, attitudes, sentiments and beliefs around peculiar subjects, thoughts, and issues without the assistance of pre-determined inquiries.

However, semi-structured interview helps to utilize the advantage of both structured and unstructured interview, so that the interview remains flexible and other of import information can still originate.

This survey used semi-structured interview to research informations that is ill-defined for the research worker and the information that are non collected through study papers and papers analysis. The interview was made with loan director, recognition analyst and recognition officers of several establishments. Documentary Analysis

Document analysis is the aggregation reappraisal, question, and analysis of assorted signifiers of text as a primary beginning of research informations. Document analysis is a tool that may be conducted utilizing paperss such as written stuffs, organisational or plan records, official publications and studies, intelligence documents, a minute of meeting among others.

The usage of documental analysis has its ain strengths and restrictions. The strength are enables to obtain the linguistic communication and words of participants, represents informations which are thoughtful, that is, participants give attending when roll uping them, and economical in footings of clip salvaging and disbursal of transcribing. Whereas, the restrictions include rawness, deficiency of truth as the paperss may non be authenticated, requires transcribing or optically scanning for computing machine entry.

In add-on to the informations obtained through other methods, this survey employs a descriptive analysis of paperss chief paperss in related to Non-Performing loans, recognition concentration. The informations are being obtained and analyzed.

3.4 Analysis Method

Both quantitative and qualitative informations analysis method were used. Based on the nature of the informations collected through questionnaires, interview and policy manuals and paperss, the undermentioned processs and statistical tools were employed.

The information that is traveling to be collected through questionnaires and informations aggregation from different papers in the establishment were tabulated and analyzed utilizing the SPSS package bundle these includes the mean and standard divergences.

Descriptive statistics were used to analyse informations. Furthermore, descriptions were made based on the consequences of the tabular arraies. The consequences that are obtained from the interview were used for the beef uping the analysis of the questionnaires.


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