Analysis of banking risks and the role of insurance indust a
ANALYSIS OF BANKING RISKS AND THE ROLE OF INSURANCE INDUSTRY FOR NATIONAL DEVELOPMENT SUNDAY C. NWITE Ph.D, ACII, ACIB, IRDI SENIOR LECTURER DEPARTMENT OF BANKING AND FINANCE EBONYI STATE UNIVERSITY – ABAKALIKI AND ALIO F.C
DEPARTMENT OF BANKING AND FINANCE UNIVERSITY OF NIGERIA - ENUGU CAMPUS PHONE NO: 080-37743134 E-MAIL: firstname.lastname@example.org ABSTRACTBanks are among the financial institutions that exist in our economy.The banking industry mobiles funds from individuals, households andcorporate organizations. The money mobilized, part of it are alwaysextended to borrowers with interest. This is the major ways banksmake their profit. There are various activities of banks like giving outloans, leasing, ownership of property, vehicles, project financing etc.there are a lot of risks that are exposed to their activities like interestrate risk, volatility risk, inflation risk, risk of failure to pay debt, delayin payment of debt and sometimes government makes some policiesagainst the bank which is a risk. These risks affects the performanceof banks. The insurance industry on its own acts as a shock absorber
by providing covers/polices to ensure adequate protection. It hasbeen found that banks activities involves a lot of risks bothsystematic and unsystematic risks and that insurance industryprovides some policies like fire insurance, theft insurance, legalexpenses insurance, credit insurance, fidelity guarantee insurance. Itis concluded that the banking risks need to be managed throughinsurance policy mechanisms. The implication is that banks are veryvolatile and if these risks are not property managed, may causeproblems to these banks which can result to distress and distressmay lead to total failure. Recommendations were made that banksshould use the insurance industry to manage their risks and alsoreceive insurance advise to help reduce the risks exposed to them bytaking adequate insurance policies.KEYWORDSHazards, perils, risks, volatility, interest risk, credit risk.