Abstract
“Balancing the Financial Sector Risk Factors for Strengthening Corporate Banking in Sri Lanka Focusing on Economic, Business Environment, Political, Commercial, and Financial Risks”
By
Chethiya Minendra Umagiliya Weerawardena
Doctor of Business Administration
Universidad Azteca, Inter-University Programs, Mexico City,
2024
Professor Friedrich Luhan, Chair
Introduction
Corporate banking is a financial area that involves loaning money and other financial services to businesses that typically serve publicly traded, large government departments, and businesses with high profit and turnover where banks make most of their profit through corporate banking. there are a few different segments of corporate banking depending on the needs of the banking institution deposit-taking, Mortgage firms, Central banks, and monetary authorities, Central banks and monetary authorities, and Brokerage firms: financial technology or fintech is the combination of technology tools and resources that corporate banking uses to differentiate itself from the competition and traditional ways of banking. This can include blockchain, online banking, mobile payments, etc. Individuals with high-income and high-earning enterprises are more likely to consider corporate banking.
Analysis
The business environment of corporate banking focuses on different risk factors including economic, political, socio-cultural, technological, and legal. The turmoil of such environments puts the banking sector at a high financial risk so understanding all risk profiles enables diffident corporate banking to implement a comprehensive risk appetite framework to balance the magnitude of risks. The risk appetite statement of the banks clearly defines how best the bank make three-tier defensive systems to balance the aggregate quantum of risks the bank is willing to assume in different aspects of business in achieving its strategic objectives covering regulatory requirements, strategic goals, capital adequacy, other prudential factors, tolerance limits of various operational risk types such as credit, market, IT risks arise from the factors mentioned above.
This study analyses the potential high-risk factors within the unavoidable circumstances in corporate banking to understand the financial risks within any of the risk zones with resulting implications or policy directives within the risks in zone or corridor of stability, within a corridor of stability but mainly towards a boundary with instability, or outside the corridor and unable to perform its functions adequately as against the endogenous risks like institutional, market, infrastructure, etc. or exogenous risks derived from macro-economic disturbances and event risks.
Conclusion
Despite a marked decline in global uncertainty since its culmination in 2008–2009, country-specific uncertainty has surged from time to time in recent years. Uncertainty in developing and emerging economies has been notably higher than in developed countries like Sri Lanka. The risk prioritization in the financial sector indicated that cyber-crimes and related innovations in technology make them more vulnerable to the corporate banking sector so corporate banks are required to be vigilance in managing their risks by analysing their risk profiles and formulating well-structured comprehensive risk appetite framework and the institutional setup.