Article: Operational risk mitigation in credit operations Journal: International Journal of Technology and Globalisation (IJTG) 2024 Vol.9 No.1 pp.1 - 18 Abstract: The process of loan concession requires a thorough knowledge of the credit institution standards and regulations. Complexity of the credit granting process can cause a considerable number of undecided corporate loan proposals due to incomplete information or decided only after several internal incidents have been reported and solved. The objective of this research is to study operational risk failures in the admission process of financing. With a sample of 5,900 corporate financing proposals during the second semester of 2019, the ratio of OR incidents of 24% detected in the sample hinders the activity of all those involved in the credit risk analysis and decision. The results reveal a measurable effect in profit margin, and on the operational incident recovery period within admission of credit risk. It also shows the growing importance of OR management and how different OR events can affect bank returns. Inderscience Publishers - linking academia, business and industry through research

Title: Operational risk mitigation in credit operations

Authors: André Couto; Rui Gonçalves; Leandro Pereira; Renato Lopes da Costa; Álvaro Dias; Rui Vinhas da Silva

Addresses: NOVA IMS, Campus de Campolide, 1070-312 Lisboa, Portugal ' LabEST, Instituto Piaget de Almada, Avenida Jorge Peixinho, No. 30, Quinta da Arreinela, 2805-059 Almada, Portugal ' BRU-Business Research Unit, ISCTE – Instituto Universitário de Lisboa, Lisbon, Portugal ' Business Research Unit – BRU-IUL, ISCTE – Instituto Universitário de Lisboa, Lisbon, Portugal ' Universidade Lusófona de Humanidades e Tecnologias, ISCTE – Instituto Universitário de Lisboa, Lisbon, Portugal ' Business Research Unit – BRU-IUL, ISCTE – Instituto Universitário de Lisboa, Lisbon, Portugal

Abstract: The process of loan concession requires a thorough knowledge of the credit institution standards and regulations. Complexity of the credit granting process can cause a considerable number of undecided corporate loan proposals due to incomplete information or decided only after several internal incidents have been reported and solved. The objective of this research is to study operational risk failures in the admission process of financing. With a sample of 5,900 corporate financing proposals during the second semester of 2019, the ratio of OR incidents of 24% detected in the sample hinders the activity of all those involved in the credit risk analysis and decision. The results reveal a measurable effect in profit margin, and on the operational incident recovery period within admission of credit risk. It also shows the growing importance of OR management and how different OR events can affect bank returns.

Keywords: financing; financial institutions; risk management; operational risk; OR; credit risk.

DOI: 10.1504/IJTG.2024.142618

International Journal of Technology and Globalisation, 2024 Vol.9 No.1, pp.1 - 18

Received: 17 Jan 2022
Accepted: 13 Apr 2022
Published online: 12 Nov 2024 *

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Title: Operational risk mitigation in credit operations

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