Proceedings of The 7th International Conference on Research in Management and Economics
Year: 2023
DOI:
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Assessing the Impact of Risk Management in Reducing the Risks of Financial Institutions in Cameroon
Bikos Njoya Julie Gaelle
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ABSTRACT:
The commercial banking sector of Cameroon experienced a serious crisis in the late 1980s, with many banks becoming illiquid and/or insolvent. Multifaceted government intervention, inadequate management, and a virtual lack of enforcement of banking regulations were at the root of this crisis, the resolution of which led to the liquidation or profound rehabilitation of several banks. In the process, there was a trebling of the debt owed to the Central Bank by the financially strained Government. The paper examines these issues, their implications, and suggests reforms in the government-bank management relationship in order to enhance the gains from the overhaul of the banking system. This work seeks to study and evaluate the relationship between Risk Reduction strategy and the profitability of Financial Institutions in Cameroon for the period 1997-2005. Given the problem statement, does risk management have an impact on risky shift through reduction of bad loans in the Cameroonian financial system? The study was aimed at finding out whether Risk Management relates negatively with profitability of financial institutions in Cameroon. The null hypothesis were raised from the problem statement; Risk Management does not affect effectively returns in financial institutions. Most of the data was collected through secondary sources found in publications, books and internet. These data were analysed using the trends analysis, table analysis, ratio analysis and standard deviation analysis to verify the relationship between Risks Management and Return of Financial institutions in Cameroon. Risks Managers should try to keep adequate liquidity level in order to meet some uncertain issues related to the withdrawals of funds or bankruptcy.
keywords: Risk Management, Financial Institution