CREDIT RISK MANAGEMENT OF NON-BANK AND BANKING INSTITUTIONS: A COMPARATIVE STUDY OF TEACHERS’FUND FINANCIAL SERVICES AND UNIQUE TRUST BANK

ABSTRACT The issue of credit risk is of greater concern because of the higher levels of perceived risks resulting from some of the characteristics of clients and the business conditions that these clients find themselves in. The structure of risk management calls for a review that reflect on policies and procedures which will help manage risk as well as conform to the best practices. As a contribution to this exercise, this study focuses on Unique Trust (UT) Bank and Teachers’ Fund (TF) Financial Services with the aim of comparing the firms’ risk practices as well as assessing their risk management practices. A structured interview guide covering understanding risk and risk management; risk identification; risk assessment and analysis; risk monitoring; risk management practices; and credit risk analysis was developed and posed to the credit officials of Unique Trust Bank and Teachers’ Fund Financial Services. The study revealed that both firms have a good risk profile. It also found that Unique Trust Bank is somewhat efficient in risk management, and risk identification and risk assessment and analysis are the most influencing variables in risk management practices. Finally, the results indicate that there is a significant difference between Unique Trust and Teachers’ Fund Financial Services in the practice of risk assessment, risk analysis, risk monitoring and risk control. Thus the study recommends that TF should pay more attention to monitoring risk exposure and revising its traditional techniques of credit mitigation. Also UT and TF should review the methods used in risk assessment and analysis.