Preliminary thoughts in banking risk management: Recommendations to Arab banks

MOH'D MAHMOUD AJLOUNI, YARMOUK UNIVERSITY, JORDAN
Structural changes (deregulation and IT services) along with growing activity in the financial markets and the international capital movements have led to the birth of the “Age of Risk”. This study argues that global financial business is facing serious challenge that is preventing a sufficient flow of capital to the real economy, due to the balance sheets' deterioration and the natural risk-averse tendency of investors. The real dilemma within the financial system is its incapability to provide the adequate amount of risky-capital necessary to secure future growth, as well as the difficulty introduced by the lessened balance sheets. Long-term survival of Arab banks in the Age of Risk requires a self-prescribed overhaul of how the they viewing themselves and their role in the financial community. They should perform new roles in the interest of promoting the flow of investments, invest in stocks and bonds and be securities underwriters. However, the effectiveness of the banks roles depends on the breadth and the depth of Arab financial markets.
Keywords: Financial Intermediation; Banking Risk; Arab Banks.