Designing a New Model to Assess the Quality of Bank Risk Management and Analyze Its Role in Reducing the Cost of Capital
Keywords:
bankruptcy, market failure , cost of capital, Bank risk managementAbstract
The purpose of this study is to develop a comprehensive model for evaluating the quality of bank risk management and to analyze its role in reducing the cost of capital. This study is applied in purpose and descriptive-analytical in nature and classified as field research. The statistical population included members of risk committees, risk unit managers, partners of audit firms specializing in the banking industry, and board members with expertise in risk management. Data were collected using the grounded theory method, and data analysis was conducted through open, axial, and selective coding. The qualitative phase involved 23 experts from academia and the banking-finance sector. The findings identified causal conditions such as information disclosure quality, managerial capability, internal control systems, financial reporting transparency, and regulatory compliance. Contextual conditions included market competition, organizational culture, IT infrastructure, institutional environment, and governance maturity. Intervening conditions comprised macroeconomic changes, regional political risks, exchange rate volatility, sanctions, and stakeholder expectations. Strategic responses involved developing an assessment framework, integrating supervisory systems, enhancing analytical capabilities, improving transparency, adopting new technologies, promoting a risk-aware culture, and adjusting credit policy. The resulting outcomes included reduced cost of capital, improved sustainable profitability, enhanced stakeholder trust, increased financial stability, greater operational efficiency, strengthened competitiveness, and mitigated systemic risk. The final model indicates that improving the quality of bank risk management through analytical, technological, and cultural strategies can significantly reduce capital costs, enhance financial stability and operational efficiency, and prevent systemic crises in the banking system.
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Copyright (c) 2025 Ehsan Hemmat Abiri (Author); Mojtaba Dastori (Corresponding author); Saeed Moradpour (Author)
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