P. Narantsetseg
Risk assessment
The Mongolian situation credit risk enhancement is evaluated by Banking industry
country r...
The Mongolian banking sector strengths and disadvantages were evaluated
according to the Standard and Poor’s analysis. The...
Table 2. Industrial risks of Mongolia
Form of Risk Risk situation Main factor
Institutional framework Extremely high risk ...
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Narantsetseg risk assessment

Risk Management for Development, final project
Published on: Mar 3, 2016
Published in: Economy & Finance      
Source: www.slideshare.net


Transcripts - Narantsetseg risk assessment

  • 1. P. Narantsetseg Risk assessment The Mongolian situation credit risk enhancement is evaluated by Banking industry country risk assessment and government rating according to the Standard & Poor’s rating service. The Standard & Poor’s evaluated the Mongolian banking system according to BICRA methodology in 2012. BICRA is scored on scale from 1 to 10, “1” lowest risk banking group, “10” highest risk banking group. The BICRA is consisted of two main areas of analysis— "economic risk" and "industry risk"--on which the Mongolian banking system scores '9' and '8'. Mongolia has ranked on group '9'. (picture 1. BICRA comparison, Mongolia) Picture 1. Source: Banking industry country risk assessment from web www.standardandpoors.com, 22-Mar-2012
  • 2. The Mongolian banking sector strengths and disadvantages were evaluated according to the Standard and Poor’s analysis. The Mongolian banking sector strengths are defined by Controllable economic imbalance, low reliance on external funding and Banks' limited exposure to innovative, complex, and risky products. Weaknesses of banking sector are defined by the vulnerabilities in a small, undeveloped, primarily commodity-based, low- income economy; regulatory framework with weak transparency and disclosure and Aggressive lending and weak underwriting standards. The Mongolia is included in the country with high risk according to Standard and Poor’s economic risk evaluations in 2012. Economic risks of Mongolia were analyzed by main factors as economic resilience, economic imbalances, and credit risk in economy. Mongolian economic risks score has been ranked on score 9 according to the banking industry assessment. (Table 1. Economic risks of Mongolia and Table 3. Peer BICRA Scores) Mongolia has ranked on country with high risk according to the Standard and Poor’s industrial risk evaluations. Industrial risks of Mongolia were analyzed by main factors as institutional framework, competitive dynamics, and systemwide funding. Mongolian economic risks score has been ranked on score 8 according to the banking industry assessment. (Table 2. Industrial risks of Mongolia) The Standard and Poor’s rated the Mongolian credit rating on BB- and positve in 2015. Table 1. Economic risks of Mongolia Form of Risk Risk situation Main factor Economic resilience Very high risk Economic structure and stability: Macroeconomic policy flexibility Political risk Economic imbalances High risk Expansionary phase Private sector credit growth Real estate prices Equity prices Current account and external debt position Credit risk in the economy Extremely high risk Private sector debt capacity and leverage Lending and underwriting standards Payment culture and rule of law.
  • 3. Table 2. Industrial risks of Mongolia Form of Risk Risk situation Main factor Institutional framework Extremely high risk Banking regulation and supervision Regulatory track record Governance and transparency Competitive dynamics High risk Risk appetite Industry stability Market distortions Systemwide funding high risk Core customer deposits & external funding Domestic debt capital markets Government role Table 3. Peer BICRA Scores Mongolia Cambodia Papua New Guinea BICRA group 9 9 9 Economic risk score 9 9 9 Industry risk score 8 9 8 Government propensity to support Highly Supportive Support Uncertain Support Uncertain Sovereign rating BB-/Positive/B B/Stable/B B+/Negative/B Source: Standard & Poor's Financial Institutions Ratings.

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