Factors Affecting Performance of Financial Institutions: A Case Study of Afghanistan International Bank

Abstract

This study investigated and focused upon the risk management practices of banks in Afghanistan and their influencesd on banking performance. In recent years, the importance of risk management in banking institutions has grown significantly, particularly following the Global Financial Crisis. The study holds particular significance in the context of Afghanistan, a developing economy where the banking sector plays a vital role in national development. The continuity and success of banks in Afghanistan were intricately tied to effective risk management. This research aims to contribute to the ongoing debate surrounding risk management effectiveness in developing countries, specifically Afghanistan. It explores the relationship between risk management practices and banking performance while assessing the level of risk understanding and management in Afghan banks. The study's findings highlight the importance of risk understanding, risk assessment and analysis, managing credit risk, and managing liquidity risk in improving risk management practices in Afghan banks. These results provide valuable insights into enhancing the effectiveness of risk management in the banking sector.