The Impact of Risk Management on the Implementation of Basel III by the Libyan Banking Industry

Ayoub Salem Mustafa Algreed; Dr. S. M. Ferdous Azam, Dr. Adam Amril Jaharadak

Abstract: The importance of banking for the functioning of the economy and the origin of the funds that finance it motivates the concern of monetary authorities for the stability of these institutions. The sub-prime crisis of 2008 highlighted the risks that affect the banking industry and the associated cost to the economy when they are not properly managed, and their risk is mitigated. The current study has used the quantitative research approach. In the quantitative approach, the researchers used the questionnaire to collect the primary data from the research respondents. The study population was the staff who work in the Libyan banking industry, and the samples were 310 respondents. The findings of this research have confirmed a positive and significant relationship between risk management and the implementation of Basel III by the Libyan banking industry. Basel III recommends that the authorities monitor the growth of bank credit and other indicators to assess whether excessive risks are being generated in the system financially. Based on this assessment, the authorities would decide when to activate the countercyclical capital to contain excessive credit expansion and, therefore, minimize the probability of severe banking problems.

FULL TEXT PDF 1-8 ] DOI: 10.30566/ijo-bs/2021.08.56

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