I think this is countered because of the recent innovation products that came up

Regulation is key. Taking reference from the Australian Banking system, who were the least effected by the GFC, they have made it mandatory for banks to hold liquid cash for every iota of risk taken by the bank.

According to APRA (Australian Prudential Regulatory Authority) it requires all locally incorporated banks to hold total capital of at least 8 per cent of their risk-weighted assets. At least half of their total capital must be the better-quality Tier 1, implying a minimum Tier 1 ratio of 4 per cent. APRA can and does also increase these minima for individual banks where considered necessary on account of their risk profile.

مرحبا

Dear Friends and Colleagues of RG,

In my opinion, the functioning of financial systems has been slightly improved, in particular in the area of the security of the banking system, including investment banking, in the scope of adapting procedures for the use of prudential instruments and improving credit risk management. Below I am explaining the key issues that are the basis of my thesis. The explanation below is the result of research into the sources of the global financial crisis of 2008 and the process of improving credit risk management in commercial banks. I have been conducting this research since the beginning of the 20th century.

If the state did not launch anti-crisis state intervention programs in the situation of the emerging largest global financial and economic crises, such as during the global financial crisis of 2008, the scale of negative economic and financial aspects of such crises would be many times greater. Then it could lead to institutional, political and organizational crisis, lack of citizens' confidence in financial institutions and institutions, money would lose its economic functions, a deepened multifaceted crisis of developed economies would emerge and there would be a risk of collapse of the capitalist system.

If during the global financial crisis of 2008 interventionist financial institutions and large key manufacturing enterprises were not used to save bankruptcy, the scale of the deconcussion of many national economies would be many times greater. The scale of unemployment, decrease in production and investment decline would be much greater than that which occurred since the end of 2008. The economic crisis with a high scale of the economic downturn would also include the largest developed economies, including the US economy, if the state did not grant preferential loans to banks using multibillion aid packages and did not launch a program of junk debt collection with the highest level of credit risk. If these intervention assistance packages were not used, recession, chaos, financial systems would be effective in many large national economies, and the scale of negative effects would be difficult to estimate.

On the other hand, the costs of the multi-billion dollar state rescue programs have been passed on to the whole of society, which is not responsible for triggering the financial crisis. Whereas investment banking, in which most sources of the global financial crisis from 2008 were diagnosed, also received financial support. In addition, some of the investment banks used low-interest loans not only to stimulate lending, but also to take over other failing financial institutions and to pay additional bonuses to the managerial staff, which was unquestionably regarded as unethical and inconsistent with the principles of good relations and the essence of public trust.

In addition, a significant part of the money from the aid packages was finally invested in securities listed on stock exchanges. Thanks to this, optimism in the capital markets quickly returned. In mid-September 2008, when bankrupt Lehman Brothers investment bank, a bank with more than 100 years of history, the 4th largest investment bank in the world, there was a stock market crash that began the global financial crisis of 2008. However, after the quarters from the beginning of the stock market crash, stock prices and other stock exchange assets started to increase again to market value, after several years to break the highest historically levels of stock market indices from 2007 and autumn of 2008.

In this way, citizens as shareholders felt richer again and the problem of the origin of the financial crisis and the need for improvement of the financial system in the matter of the necessary refinement of credit risk management instruments could be described as colloquium. In this way, extra money added to the system, which should create additional economic values ​​added in the economy, did not create them because they largely channeled in the financial system, on the stock exchange markets. In connection with the above, interventionist multibillion aid packages did not contribute to a significant improvement in the functioning of the financial system in the investment banking sector and, as it later turned out, were used to save the state's financial system from the chaos of citizens.

Dear Colleagues and Friends from RG,

In line with the above, I suggest continuing the discussion on the following topic:

Improving credit risk management at commercial banks.

The above discussion inspired me to formulate the following question:

What are the most important determinants of improving your credit risk management process at commercial banks?

On the basis of the above considerations and conclusions from the discussion on interesting issues discussed, I formulated the following thesis that many determinants of improving the credit risk management process in commercial banks stand out. Some of the factors affecting or shaping the issue of credit risk management are related to the market, economic, competitive, systemic, normative, state, etc. environment in relation to banks operating in the banking system. In addition, there are many internal factors affecting the process of conducted credit risk management, i.e. those arising from the business and the efficiency and effectiveness of the management process taking into account the issues of rapid response to emerging signals informing about growing levels of specific risks, early warning indicators and rapid improving the instruments for identifying, analyzing and quantifying credit risk and effectively improving the bank's security systems against the negative effects of materializing certain categories of risk.

Below I have described the key determinants confirming the formulated research thesis. To the above discussion I would like to add the following conclusion formulated as a summary of my earlier considerations on this topic: credit risk management in commercial banks.

As part of my doctoral dissertation, I studied the process of improving credit risk management at commercial banks operating in my country. In my country, investment banking is a small part of the banking system, so I studied the problem of improving credit risk management on the example of commercial banks representing classic deposit and credit banking. The research that I conducted in the field of improving credit risk management for the needs of my doctoral dissertation concerned the 1990s and the beginning of the 21st century. For the purposes of my dissertation, I studied the correlations between such factors as:

- procedures, instruments, determinants of the analysis of creditworthiness of enterprises applying for economic and investment loans,

- procedures, instruments, determinants of the analysis of the creditworthiness of individual customers applying for a consumer loan,

- information asymmetry between the bank and the borrower,

- the role of a credit inspector in the context of the analysis of the creditworthiness of potential borrowers applying for a specific type of bank loan,

- the issue of reliability of creditworthiness analyzes carried out by the credit inspector of potential borrowers applying for a specific type of bank loan,

- objectification, automation, computerization of creditworthiness analysis processes of potential borrowers applying for a specific type of bank loan,

- determinants of changes in the bank's credit policy adapting to changes in the economic and financial situation of the bank's customers,

- the quality of the bank's loan portfolio,

- procedures, instruments, determinants of improving the commercial bank's credit portfolio risk management process,

- the economic and financial situation of a commercial bank, the major part of revenues from the sale of banking products and generated profits comes from lending activities,

- analysis of business cycles, with particular emphasis on the change in the level of economic activity in the enterprise sector, i.e. the main clients of commercial banks, which obtain a significant part of their revenues from the sale of business loans,

- exchange rates of shares listed on the Stock Exchange of the examined banks, i.e. changes in the level of market valuation of the examined banks.

I have posted a summary of the research and the results obtained from the research and interesting conclusions on the Research Gate portal. After defending my doctoral dissertation, I continued my research on the issue of improving credit risk management at commercial banks in the analysis of correlation with various factors surrounding the banks, affecting the economic and financial standing of bank customers. The conclusions that I wrote in my doctoral thesis pointed to key issues that commercial banks should improve in their lending activities to reduce the likelihood and scale of portfolio and systemic credit risk increase and to avoid a situation of loss of liquidity and serious financial problems. I defended my PhD thesis for a few years against the appearance of the global financial crisis in 2008.

The conclusions contained in my doctoral dissertation contained important suggestions regarding key aspects, instruments, determinants, directions of the process of improving credit risk management in commercial banks. These conclusions are still valid. In addition, I continued research for the purposes of my dissertation in the following years. After the emergence of the global financial crisis in 2008, I also examined lending and investment activities at financial institutions, including investment banking, which played a key role in increasing credit risk significantly above optimal levels, secured in reserves. In addition, in my publications posted on the Research Gate portal, I also pointed to other sources of the global financial crisis of 2008 and pointed out the key issues in the process of improving credit risk management and investing in banks. I pointed out, inter alia, the role of monetary policy, systemic liberalization and deregulation regarding the activities of commercial banks, including investment banks, which have taken place since the 1990s, as well as other important factors and sources of the global financial crisis of 2008. The conclusions of the research I published in scientific publications that are available on the Research Gate portal. I invite you to cooperation.

In line with the above, in my opinion, there are many determinants for improving the credit risk management process at commercial banks. Some of the factors affecting or shaping the issue of credit risk management are related to the market, economic, competitive, systemic, normative, state, etc. environment in relation to banks operating in the banking system. In addition, there are many internal factors affecting the process of conducted credit risk management, i.e. those arising from the business and the efficiency and effectiveness of the management process taking into account the issues of rapid response to emerging signals informing about growing levels of specific risks, early warning indicators and rapid improving the instruments for identifying, analyzing and quantifying credit risk and effectively improving the bank's security systems against the negative effects of materializing certain categories of risk.

Do you agree with me on the above matter?

I conduct research in this area. The conclusions of the research I published in scientific publications that are available on the Research Gate portal.

In view of the above, I am asking you the following questions:

- Which factors of the bank's environment are particularly important in the context of analyzing the market, economic, competitive, systemic, normative, etc. environment in the context of the credit risk management process?

- What internal and intra-bank factors significantly influence the process of credit risk management at the bank?

- In your opinion, what are the most important determinants of improving the credit risk management process at commercial banks?

- What do you think about this topic?

- What is your opinion on this topic?

Please reply.

I invite you to discussion and scientific cooperation.

Thank you very much.

Best wishes.

Dariusz Prokopowicz

There are different credit risk management systems for banking, developed by different vendors such as... AxiomSL, BearingPoint, Fernbach, FICO, FIS, IBM, Misys, Moody’s Analytics, Oracle, Prometeia, QRM, Rockall Technologies, SAP, SAS, Wolters Kluwer Financial Services and ZEB

( https://www.chartis-research.com/vendor-analysis/credit-risk-management-systems-banking-book-2016-1135 )

Dear Colleagues and Friends from RG,

My research suggests that perhaps credit risk management procedures and systems have already been optimally improved, and now commercial banks mainly deal with the improvement of IT systems, cybercrime, data transfer on the Internet, and development of electronic internet and mobile banking. Over 10 years have passed since the appearance of the global financial crisis in September 2008. For several years, the economies of many countries have already returned to post-crisis balance, to optimal levels of economic growth. The situation on the stock exchange markets has also improved significantly after a few years since 2008. Recently, however, more threats and factors are slowing down the economic growth of the global economy. These factors currently include the so-called trade wars waged between the largest economies of the world, including in particular between the US, China and the European Union, and the growing problem (currently end of February 2020) of the increase in coronavirus infection. For these two reasons alone, a significant decline in economic growth is forecast in many countries and globally in 2020. As a result, the economic and financial situation of many enterprises will deteriorate.

For example, the economic and financial situation of enterprises producing mainly for export and tourism companies may deteriorate significantly. If companies are in the process of paying off loans and their finances are burdened with a high level of debt, then there is a possibility of an increase in financial liquidity risk and an increase in systemic credit risk, i.e. not timely repayment or suspension of repayment of bank loans. Are commercial and investment banks prepared for this possible negative scenario? Did the banks, after negative experiences from the global financial crisis of 2008, improve their standards and procedures for managing credit risk and do not have to fear a significant slowdown in the economic growth of the global economy in 2020?

My research shows that financial markets significantly model and discount the credit risk associated with transactions carried out in these markets. I have been researching this issue for many years and I have noticed that for some time the scale of correlation between what is happening in the real economy and the valuation of specific assets on financial markets, including capital, currency, securities and derivatives is still high. On the other hand, however, institutional, organizational, structural, functional, etc. changes that have been taking place on domestic and international financial markets since the 1970s increase the scope of investment, credit and other categories of financial and market risks during financial investment transactions and / or investing in specific assets listed on stock exchanges and other capital market segments. Banks and investment funds operating and dominating on these markets have advanced models of valuation of specific categories of financial, banking, market, operational risk, etc. developed over many years of experience.

In recent years, risk management processes, including credit risk, have been improved through the implementation of Industry 4.0 advanced data processing technology into analytical processes. Thanks to the developed analytics based on economic knowledge, science instruments, quantitative estimation of various categories of economic aspects of the operation of enterprises and financial institutions, complex risk valuation models based on large quantitative data resources, the use of business analytics, verification of various categories of information on Business Intelligence research platforms, Data Science, Data Analytics, Big Data as well as statistical and probabilistic research instruments, the use of selected financial and stock market indicators, globally operating banks and investment funds have the possibility of precise valuation of almost any risk category. However, the problem is the issue of business ethics, and basically its excessive reduction from time to time. Well, in a situation of prosperity lasting at least several years, both in the real economy and in capital markets, most economic entities located on both sides of the markets begin to accept too high levels of credit risk and other risk categories. it should be added here that in this group of most entities only a few carry out risk assessment analysis processes, have risk valuation tools, run risk management processes and can accept transactions fully secured against negative scenarios on financial markets.

Most enterprises and institutions, as well as other types of business entities, financial market participants do not do this, do not carry out these analyzes. These are primarily clients of financial services and products, using the services of banks and investment funds, individual clients and numerous non-financial enterprises. These entities rely on the opinion and analyzes carried out, on the recommendations and recommendations formulated for them by banks and investment funds. However, if the rating agencies belonging to banks before the global financial crisis of 2008 were able to give the media unreliable recommendations that were misleading thousands of millions of financial services clients to the media, then in such a situation the systemic credit risk could grow rapidly and also exceed optimal levels , acceptable, secured credit risk in transactions also carried out on capital markets using the financial capital of clients.

The conducted research shows that the key sources of strong credit risk increase and the emergence of the global financial crisis in 2008 include unethical business practices, failure to comply with the principles of corporate social responsibility in investment and commercial banks that sold junk securities for the high level unaware investor risks or loans to citizens without creditworthiness, including even without a stable source of income. Examples of breaking the rules of business ethics, failing to respect the principles of corporate social responsibility, unreliable, incomplete, improper information to customers, etc. were diagnosed in the operations of many banks before the global financial crisis emerged in autumn 2008. In addition, unreliable compliance with risk analysis process procedures has been diagnosed at almost all levels and stages of transaction processes or analytical related key issues necessary for the assessment and valuation of specific categories of financial, banking, market, operational risk, etc. From the first contact of a banking adviser helping a potential borrower complete the application for a mortgage, by maintaining a certain level of cash reserves and highly liquid investment instruments required by the regulations of the banking supervision institution, ongoing risk monitoring of the entire loan portfolio and other financial instruments, including derivatives, up to the systemic deregulation carried out in the 1990s and the central bank's policy, which for many years until 2007 kept record low interest rates - diagnosed many mistakes that led to the creation of too high, not fully secured system credit risk and generating a global financial crisis in 2008.

In my opinion, the issue of security of information transfer on the Internet, the issue of cybercrime in the development of online mobile banking and the management of risk of electronic banking are currently one of the most important topics in the issue of the possibilities of developing online electronic banking. In recent years, financial institutions, but also other financial resources have been increasingly allocated to building information security systems and improving IT system risk management processes and information transfer on the Internet. In banks, improving IT risk management processes and information transfer on the Internet is treated as equally important as managing classic categories of banking and financial risk, such as credit risk management.

Of all risk categories that are examined and for which risk management systems in commercial banks are being improved, it is the management of IT systems risk and the risk of data transfer security in electronic banking that is currently the type of risk of commercial banking activity to which banks currently devote the most expenditure to improve IT system risk management and data transfer security risk in online electronic banking. In recent years, the importance of cybercrime is growing, which cannot be completely eliminated by even the most perfect legal regulations, because the problem is of a technological nature, not systemic. Therefore, the problem of maintaining the privacy of personal data on websites can be realistically solved basically primarily in terms of refining the technological protection of these data against copying, reading by programs, machines, worms that walk in the background on websites and all contained data is read and copied on these pages. This type of security is improved in financial institutions, including banks developing electronic online and mobile banking, because in these institutions it is currently a key business and image issue. I conduct research in this area, mainly in the field of applications of Business Intelligence analytics carried out in Big Data database systems and in the field of secure data transfer on the Internet and cybersecurity in electronic online banking. The conclusions of the research I published in scientific publications that are available on the Research Gate portal. I invite you to cooperation.

In recent years, one of the key determinants of the development of online mobile banking is the development of Internet technologies, ICT information, security technologies for data transfer on the Internet and advanced data processing Industry 4.0. Online mobile banking is growing dynamically because developmental factors still outweigh the factors limiting this development. The main development factors are the reduction of operating costs for banks and facilitation of remote access to banking services, including mobile payments for customers. Currently, the only development barrier may be increased activity of cybercriminals stealing data from online banking clients, hacking clients' online bank accounts and robbing clients from financial resources. However, for now, banks are quickly identifying these types of cybercrime incidents and are gradually improving mobile banking security systems. Another factor limiting the development of online mobile banking may be the number of bank customers interested in this type of banking.

In connection with the above, in recent years the importance of IT system risk management, cybercrime, data transfer on the Internet, and development of electronic online and mobile banking has been growing. Commercial banks, by developing electronic internet and mobile banking, are spending more and more on improving the security systems of online banking IT platforms, protecting IT systems against attacks by cybercriminals and hackers breaking into banking IT systems or computers, laptops and smartphones used by online banking customers. Perhaps the procedures and systems for managing credit risk have already been optimally improved and now commercial banks mainly deal with the improvement of IT systems, cybercrime, data transfer on the Internet, development of electronic internet and mobile banking.

Do you agree with my opinion on the above issue?

I conduct research in this area. The conclusions of the research I published in scientific publications that are available on the Research Gate portal.

In view of the above, I am asking you the following questions:

- Is the issue of cybercrime currently a key topic in the development of online electronic banking?

- Is the security of information transfer on the Internet and the issue of cybercrime currently one of the most important topics in the issue of the development of online electronic banking?

- Is the issue of security of information transfer on the Internet, issues of cybercrime in the development of online mobile banking and risk management of electronic banking currently one of the most important topics in the issue of development of online electronic banking?

- In recent years, have banks been mainly improving the process of managing online banking security risk?

- In recent years, are commercial banks mainly developing risk management instruments for data transfer security in online banking in connection with the development of online mobile banking?

- Has greater investment in commercial banks been allocated to improving risk management of data transfer security in online banking in recent years than to improving credit risk management?

- Are commercial and investment banks currently spending more on improving the IT system risk management process compared to improving credit risk management processes?

- Has the importance of improving IT risk management processes and information transfer on the Internet been growing in recent years?

- Maybe credit risk management procedures and systems have already been optimally improved and now commercial banks mainly deal with the improvement of IT systems, cybercrime, data transfer on the Internet, development of electronic internet and mobile banking?

- Is IT system risk management more important for banks than credit risk management?

- What do you think about this topic?

- What is your opinion on this topic?

Please reply.

I invite you to discussion and scientific cooperation.

Thank you very much.

Best wishes.

Dariusz Prokopowicz

There are improvements, but still some work to be done:

https://www.bis.org/publ/cgfs60.pdf

Dear Sule Akkoyunlu, Thank you very much for the provided link to bibliographic sources. I also encourage you to continue discussions on various topics on my profile.

Best wishes.

Dariusz Prokopowicz

I would like to add the following question to the above discussion: If Chinese banks sell (as recently declared by China) a significant part of the US Treasury bonds, can the value of the US dollar drop significantly? Will it cause significant perturbations and destabilization of the situation on financial markets? Will systemic risk increase in the banking systems and public finances of some countries?

What do you think about it?

What's your opinion on this topic?

Please reply, Regards, have a nice day,

Dariusz Prokopowicz

Yes, Nevertheless, continuous improvements needed... credit risk can be managed and minimized when formidable strategic approaches are implemented and adhered to. This implies that the strategy operated by a bank is an important consideration for a CRM system to be successful... Afriyie, S. O., Yusheng, K., Kaodui, L., Caesar, A. E., & Akomeah, M. O. CREDIT RISK MANAGEMENT SYSTEM OF COMMERCIAL BANKS: AN ANALYSIS OF THE PROCESS.

It has been found out that in order to minimize loan losses and so as the credit risks, it is essential for Commercial banks to have an effective CRM system in place (Muro et al., 2013)... Regarding asymmetric information that exists between lenders and borrowers, banks must have a mechanism to ensure that they do not only evaluate default risk that is unknown to them ex-ante in order to avoid adverse selection, but also that can evolve ex-post in order to avoid moral hazards. According to Molla (2018), CRM is very essential to optimizing the performance of banks... MOLLA, M. T. 2018. Credit Risk Management and Performance Analysis of Janata bank Limited.

MURO, M. B., MAGUTU, P. O. & GETEMBE, K. N. 2013. The strategic benefits and challenges in the use of customer relationship management systems among commercial banks in Kenya. European Scientific Journal, ESJ, 9.

Dear D A Gayan Nayanajith,

Thank you for participating in our discussion and for answering the question: Were the credit risk management systems improved in banks after 2008? Thank you for the proposed source of literature for this issue of improving the credit risk management process in commercial banks after the global financial crisis of 2008. You added an important point to our discussion.

Best regards,

Dariusz Prokopowicz

Dear Remi Chukwudi Okeke,

Thank you for answering the question: Were the credit risk management systems improved in banks after 2008?

Thank you for participating in our discussion and confirming my theses. I invite you to cooperate in the field of research on the improvement of the credit risk management process in commercial banks operating in individual countries.

Best wishes,

Dariusz Prokopowicz

More than a decade has passed since the global financial crisis of 2008. In individual countries, financial systems have been strengthened by establishing additional financial stability funds, and the standards and procedures for carrying out individual activities and stages of the credit risk management process have been improved. The issue of the application of business ethics and corporate social responsibility by banks towards borrowers was improved so that again banks could be at least in theory referred to as institutions of public trust. The aim of the prudential measures taken at the systemic and macroeconomic level, coordinated by the central bank and institutions supervising the functioning of the financial system, as well as improving the security standards of financial transactions in commercial banks, was to reduce the risk of another financial crisis in the next several or several years. 2020 saw a global economic crisis that significantly reduced the revenues and profits of commercial banks. Despite the fact that the source of the aforementioned crisis were atypical biological factors, i.e. the SARS-CoV-2 (Covid-19) coronavirus pandemic, the economic effects of this crisis and the interventionist, anti-crisis socio-economic policy instruments used were modeled on analogous activities implemented by governments of individual countries in the situation of interventionist limitation of the scale of the economic downturn during the previous financial and economic crises. On the other hand, the SARS-CoV-2 (Covid-19) coronavirus pandemic has increased pressure to continue systemic prudential measures coordinated by central banks and financial system regulators. Individual commercial banks, however, do not undertake similar actions, as they considered the precautionary measures applied in 2008-2010 to be sufficient. In addition, in recent years, commercial banks have focused their analytical activities and improving their functioning on the field of electronic internet banking, including mobile banking. In recent years, commercial banks have improved the processes of cybercrime risk management in the context of online banking. On the other hand, in some countries, including the country where I only operate, now, more than 10 years after the global financial crisis of 2008, the process of concluding agreements between commercial banks and borrowers began, and they were encouraged by these banks to take out foreign currency loans, the so-called Swiss francs (i.e. granted in real terms in the national currency but in the denomination formula against the Swiss franc CHF). The point is that just before the outbreak of the global financial crisis on a global scale, i.e. in mid-September 2008, commercial banks, taking advantage of the period of strong, speculative economic growth in the housing construction sector, granted Swiss franc loans to citizens, who often bought their first own flat. In the countries of the Anglo-Saxon financial system, where investment banking is most developed, the first symptoms of a developing financial crisis appeared more than a year earlier, i.e. around mid-2007.

Regards,

Dariusz Prokopowicz

In the context of the above-mentioned issues, a new, interesting research question arises: If the economic crisis caused by the SARS-CoV-2 (Covid-19) coronavirus pandemic did not turn into a financial crisis on financial markets, in banking systems, i.e. into a financial crisis? does this mean that after the global financial crisis of 2008, credit procedures, securities trading procedures, credit risk management processes, etc. in investment banking have been significantly improved?

Thank you, Best wishes,

Dariusz Prokopowicz

In the country in which I operate for the first time in 27 years, the commercial banking sector showed financial losses in its financial statements. The commercial banking sector generated losses of PLN 950 million for 2020. As the reason for showing the net loss, the banks indicate the reserves of Swiss francs, which they had to create for possible losing lawsuits in lawsuits initiated by the borrowers. For 2 years, Swiss franc borrowers have been filing more and more lawsuits against banks that contained abusive clauses in their contracts and when concluding a CHF-denominated mortgage loan agreement did not provide reliable information to customers about a very high potential credit risk and the possibility of a large increase in the future loan installments in the event of instability in financial markets, including currency markets. The question arises whether in 2020 the main reason for the significant drop in profits were the aforementioned reserves created for the possible coverage of Swiss franc borrowers' claims, while an important factor in the decline in lending in 2020 was the SARS-CoV-2 coronavirus pandemic (Covid-19). For comparison, a year earlier, the commercial banking sector generated PLN 12 billion in profit for 2019. Has a similar situation occurred in your countries? Have profits dropped significantly and net losses generated in your countries due to the SARS-CoV-2 (Covid-19) coronavirus pandemic?

Please reply,

Thank you very much,

Best wishes,

Dariusz Prokopowicz