Risk Management in Banks: A Descriptive Study

Habib ur Rahman


Banking, though integral part of an economy, is the most volatile business because of the commodity it deals in changes value with variation in its circulation. Money value in the market, at times, is determined by its quantity, but the number of transactions carried out with money is of equal importance. Rarely, it happens that the quantity alone affects its purchasing power. The value of money is thus a function of both the supply and demand which together determines the trend of prices in the market. The supply of money results from the credit decision of banking industry as a whole which generally takes into account the market scenario depicting future economic activities and safety of banks funds. No doubt the scope of market mostly depends upon the availability of finances yet the market stability ultimately helps in credit expansion by promoting optimism and growth opportunities in the economy. This paper will discuss the various elements of risks which render the money market more volatile and will suggest preventive measure to minimize the chances of Loss so that the flow of credit may continue unhindered.

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