Credit Portfolio Management in Financial Institutions

Sawhney, Mamta (2005) Credit Portfolio Management in Financial Institutions. [Dissertation (University of Nottingham only)] (Unpublished)

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The past few years have seen tremendous markets dynamics. There is an unprecedented growth in market and at the same time there is development of newer and complicated financial products. Times are of grand scale transactions and thus grand credit requirements. This has caught the fancy of the regulators as well as financial institutions that are increasingly being aware of sound credit risk management strategies. However, the approach is changing its face.

Off late, Credit Portfolio Management (CPM) techniques had been superseding the traditional credit risk management practices. A huge array of credit portfolio models is now available in the market and is still increasing. However, there is lack of literature on the subject. The objective of this paper is to give an overview of CPM procedure with factors affecting it, the larger aim being providing a practical guide on the subject.

Currently, very few integrated solutions are dedicated to credit portfolio management. Since credit portfolio management is still an evolving practice, most institutions use a multitude of different tools and data from many different vendors. It is expected that more integrated and analytically capable products to develop over the next two years as best practices become better defined.

The paper encompasses an overview of CPM, the key concepts associated with it, the CPM process and financial instruments used as tools of CPM. It takes into account the impact of Basel regulations on credit risk management. The key concepts are then correlated and applied in the form of a numerical example. Thereby an analysis of current CPM scenario is made to come up with implications and suggestions for future use.

Note: The terms financial institution, banks and insurance company are all used sparingly as any financial organisation, in the paper.

Item Type: Dissertation (University of Nottingham only)
Keywords: Credit Risk Management, Portfolio
Depositing User: EP, Services
Date Deposited: 08 Dec 2005
Last Modified: 21 Mar 2022 16:03

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