Analyzing financial risk management in banks: Evidence of liquidity, credit and capital risk in South Africa

ABSTRACT: The purpose of this study is to investigate the factors influencing financial risk management in South African banks during the period of 2006 – 2011 as banks are considered as trust worthy institutions for depositors and investors. This study investigates the significance of return on assets, return on equity, capital adequacy ratio, operating efficiency ratio, gearing ratio, networking capital, loan loss reserves, bank size, ownership and cash with liquidity, credit, and capital risk management in South African banks. The study found out that ownership structure of the banks is not an influencing factor on financial risk management. In addition, the size of the banks is the major factor influencing financial risk system in South Africa. Keyword: Risk Management, Liquidity Risk, Credit Risk, Capital Risk, South Africa. …………………………………………………………………………………………………………………………