Assignment #01 Marks= 20

Credit & Risk management (FIN725)

ANB limited is a large size bank operating for the last 20 years, with the increase in
challenges of financial markets the management has to invest more towards risk
management. Although bank has a proper risk management system but the amount of
non-performing loans (NPLs) is increasing with the increase in lending. Management is
worried about NPLs as they can negatively affect the profitability of bank in long run. To
address this issue; top management has called risk managers to review why NPLs are
increasing. Risk managers have identified loans as main source of credit risk and
increasing NPLs for the banks. They have reported that bank has adopted proper credit
risk management process for lending; internal as well as external ratings are used in loan
process to check the creditworthiness of borrowers. Once loan is granted after proper
investigation of borrowers; our duty is over, said by one of the risk managers. Senior
management and risk managers have been asked to suggest the ways to reduce the
amount of NPLs and to mitigate the credit risk, bank is currently facing.

After reading the above case and the article Credit Risk and Commercial Banks
Performance in Tanzania: a Panel Data Analysis provided in downloads section of your
course website analyze the risk management of ANB on the basis of following questions:

Have risk managers correctly identified the source of credit risk for ANB
Limited? If no, what are the other factors that contribute towards credit risk?
Have ANB adopted effective risk management system to mitigate credit risk?
Which internal (Banks internal systems) and external (regulatory and market)
measures can be adopted by the bank to control the increasing amount of NPLs?

NOTE:
You have to analyze the risk management of ANB in the light of above mentioned article
(Consider the introduction, literature review and conclusion parts of article for the given
case).
Step wise instructions for downloading article and solution-format file
1. Go to Your VULMS account
2. Log in by giving your username and password
3. Find the course FIN725 Credit & Risk Management
4. Click the tab Course website
5. Click the tab Downloads
6. Click the link titled Assignment-article to download the file. Read article, prepare
answers and submit it on LMS within due date.
IMPORTANT NOTE:
Before attempting the assignment, thoroughly read the article twice or thrice for
better understanding
Answer all given questions with reference to given article
Answer the questions in your own words after understanding the content of
article. Copying material directly from article is not allowed. We encourage your
efforts to prepare answers with your own understanding

General Instructions:
Due date:
Make sure to upload the solution file before the due date on VULMS
Any submission made via email after the due date will not be accepted
FORMATTING GUIDELINES:
Use the font style Times New Roman or Arial and font size 12
It is advised to compose your document in MS-Word format
You may also compose your assignment in Open Office format
Use black and blue font colors only
RULES FOR MARKING
Please note that your assignment will not be graded or graded as Zero (0), if:
It is submitted after the due date
The file you uploaded does not open or is corrupt
It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
It is cheated or copied from other students, internet, books, journals etc.
OTHER IMPORTANT INSTRUCTIONS:
If plagiarism found more than 10%, your assignment will be marked zero because
university is following no plagiarism policy
Copy paste of data without any logical reason will also be marked zero
Do not put so much emphasis on the statistical section (statistical model that has been
used and applied in the study) of the article as it will enhance your study of article but
will not be discussed in the critical review of the paper
Give to the point and concise answers because irrelevant material will be marked zero
Best of Luck!!