EVALUATING THE MULTIPLICATIVE EFFECT OF CREDIT RISKS ON THE FINANCIAL STABILITY OF COMMERCIAL BANKS
Maxkamov Xursanbek Maxmudovich
Independent Researcher at Andijan Institute of Agriculture and Agrotechnologies, Lecturer at the Department of Economics and Finance at Andijan Branch of Kokand University
Keywords: credit risk, commercial bank, Basel III, expected loss (EL), probability of default (PD), liquidity, capital adequacy, information asymmetry.
Abstract
This thesis investigates the theoretical and methodological foundations of credit risks, one of the most critical financial hazards affecting commercial banks' operations, and analyzes their impact on banking stability. The adverse consequences of increasing credit risk levels on bank capital adequacy, liquidity, and profitability are demonstrated through multiplicative economic models and the international Basel III framework. Concluding the research, practical recommendations have been developed to effectively manage credit risks and reduce the share of non-performing loans (NPLs) in the national banking system.
