The Role of Internal Audit in Credit Risk Management in Commercial Banks

Vlora Berisha, Fisnik Morina, Alban Hetemi and Blerta Zeqaj
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Vlora Berisha: Faculty of Business, University ‘Haxhi Zeka’, Republic of Kosovo
Fisnik Morina: Faculty of Business, University ‘Haxhi Zeka’, Republic of Kosovo
Alban Hetemi: Faculty of Business, University ‘Haxhi Zeka’, Republic of Kosovo
Blerta Zeqaj: Faculty of Business, University ‘Haxhi Zeka’, Republic of Kosovo

Economic Alternatives, 2023, issue 1, 115-130

Abstract: This study focused on assessing the role of internal audit in credit risk management in commercial banks in Kosovo. Methodology: The methodology used was quantitative, involving data collection through a structured questionnaire for internal auditors and bank loan analysts in Kosovo. The survey aimed to gather information about their practices, adherence to Institute of Internal Auditors standards, and the organization’s credit risk management structure and responsibilities. The Chi-Square test was applied to test the hypotheses. Study Findings: Internal audit affects the reduction in credit risk and the definition of existing credit policies. Also, a positive relationship was found between bank size and the approach used in auditing, and the organisation of credit policies and credit risk management in commercial banks in Kosovo. Originality: Through this scientific paper we can present real and consistent results regarding the role of internal audit in credit risk management in commercial banks in Kosovo. Extracting data from the questionnaire and adhering to international standards on auditing leaves room to draw competent conclusions and recommendations in this area.

Keywords: commercial banks; credit risk; internal audit; risk management. (search for similar items in EconPapers)
JEL-codes: G21 M4 M42 M48 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:nwe:eajour:y:2023:i:1:p:115-130

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