Journal of Applied Finance & Banking

Credit Risk Management in the Financial Markets

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• Abstract

  The main task of the financial system is to ensure the flow of resources from sectors with an excess of funds to those with a gap in funds. The developments of the past twenty years in particular, have paved the way for new turnovers in the field of finance and with the globalization phenomenon, foreign capital flows are transported rapidly to the farthest corners of the world. In addition, more complex market structures emerge on the agenda as well as complex financial tools and crises and their impact becomes more permanent. Taking into consideration the dimensions global financial markets have reached, it is evident that problems occurring from the inefficiency of financial risk management have continued to grow. The search for a solution to ‘risk management in the financial markets’ - and particularly ‘credit risk management’ and its application - has gained importance. With reference to these determinants, our study focuses on ‘credit risk’ and ‘management’ and while the Basel III standards are the topic of discussion in terms of risk activities for the banking sector, an inquiry is made into how effective the models and arrangements put forth to prevent risk are.