swot mix and pestel analysis: effective tools of risk

The Millennium University Journal

Vol. 2, No. 1; 2017

ISSN 2225-2533

Published by The Millennium University

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SWOT Mix and PESTEL Analysis: Effective Tools of Risk

Management of Leasing Companies

Dr. Md. Aminul Islam

Associate Professor of Accounting

Nawabganj Government College, Chapai Nawabganj, Bangladesh

E-mail: [email protected]

Abstract

SWOT mix and PESTEL scenario are considered to have impact on risk management practices of financial

institutions. Based on the data collected through questionnaire survey and annual reports of the sample companies,

the researcher has identified the strengths, weaknesses, opportunities and threats and also mentioned the possible

ways of addressing the weaknesses and countering the threats. Ways are indicated as to how strengths are matched

to opportunities to gain competitive advantage. The empirical study shows that an efficient SWOT and PESTEL

analysis will definitely help the companies develop an effective risk management framework that will keep all sorts

of risks within control.

Keywords: Formal Education, Non-Formal, Informal, Codification, Knowledge and Skills.

1. Introduction

As a developing country, Bangladesh needs huge investment in every sector of economy for achieving sustainable

growth. The commercial banks and stock markets had been the traditional sources of funds for investment in

Bangladesh. But these sources are not enough to meet the increasing demand of capital investment for industrial

development. In this backdrop, leasing companies came forward in 1980's to serve as an alternative source of

financing.

The Industrial Development Leasing Company Limited (IDLC) was the first leasing company of the Country

set up in 1985 under the regulatory framework of Bangladesh Bank. The company started operation in February

1986.1 IDLC was licensed as a financial institution by the Bangladesh Bank, following the enactment of the

Financial Institutions Act 1993. Another leasing firm, the United Leasing Company Limited (ULC), now called

United Finance Ltd., started its operation in 1989. Leasing companies, as organized in Bangladesh, are in operation

with the following objectives:

▪ To assist the development and promotion of productive enterprises by providing equipment lease financing

and related services;

▪ To assist in balancing, modernizing, replacement and expansion (BMRE) of existing enterprises;

▪ To extend financial support to small and medium scale enterprises;

▪ To provide finance for various agriculture equipment, and

▪ To activate the capital market by operating as managers to the issue, underwriters, or portfolio managers.2

Leasing companies in Bangladesh are now involved in wide range of activities in addition to conventional lease

financing. The functions performed are, Lease financing, Short-term financing, House-Building Financing;

Merchant Banking; and Corporate Financing. The products of leasing companies include lease finance, SME

finance, Term loan, revolving credit, bridge finance, project finance, working capital, syndication, consumer loan,

auto loan, women entrepreneur loan etc.3

1 IDLC Finance Ltd. , Annual Report 2012 (Dhaka :IDLC Finance Ltd.,2012), 9. 2 Sarahat S. Chowdhury, “Growth and Prospect of Leasing Industry in Bangladesh: A Study Based on

Performance Evaluation of Selected Leasing Firms,” International Journal of Advances in Management, Economics

and Entrepreneurship 1, no.05, (September, 2014): 01. Accessed July 25, 2015, online at: www.ijamce.info. 3 Ibid., 2.

mailto:[email protected]

http://www.ijamce.info/

www.themillenniumuniversity.edu.bd/journal/index.php/TMUJ The Millennium University Journal Vol. 2, No. 1; 2017

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The leasing companies in Bangladesh are closely involved in stock market related activities such as issue management,

underwriting, trust management, private placement, portfolio management and mutual fund operations.4The industrial

sector of the economy depends quite heavily on leasing companies for different types of long- and short-term finances.

This contributed a lot behind robust growth of leasing business in Bangladesh. Leasing companies have been given

license and regulated under The Financial Institutions Act 1993 as Non-Bank Financial Institutions. Presently 32 NBFIs

are in operation, 3 are government owned, 10 are joint venture and the rest 19 are locally private-owned.5At the moment

out of 32 NBFIs, 23 are listed in DSE of which 20 are involved in leasing business. Leasing companies have been

providing diverse nature of financial services that involve different kinds of risk. SWOT and PESTEL analysis can play

important role in developing effective risk management mechanism for leasing companies in Bangladesh.

2. Risk Management Practices of Leasing Companies

In general term, risk is the element of uncertainty or possibility of loss that prevails in any business transaction, in any

place, in any mode at any time. Risk is an integral part of every business. It is inherent in all types of commercial

operations. Risk is defined as the variability of returns from those that are expected.6It has a very close relationship with

returns. The greater the variability of the expected returns, the riskier the project. Risk exists because of the inability of the

decision maker to make perfect forecasts.7 So, it needs to be managed properly. All business enterprises are exposed to

risk. But financial institutions like banks and leasing companies face some special kinds of risks because of their nature of

activities. The risks that are usually faced by leasing companies are credit risk, market risk, liquidity risk and operational

risk.8The main objective of the leasing companies is to maximize the shareholders wealth by providing various financial

services mainly by managing risk. Risk management is said to be the cornerstone of prudent financial services.9

So, the leasing companies always follow some prescribed rules and procedures of risk identification, risk

assessment and risk control which help them become more shock absorbent and risk resilient.

The Bangladesh Bank under its prudential regulatory guidelines advised all the banks and financial

institutions in Bangladesh to follow a structured framework for risk management. In recognition of the importance

of an effective risk management system, Bangladesh Bank issued guidelines on ‘Managing Core Risk of Financial

Institutions’ Five Core Risks are-Credit Risk, Asset and Liability/Balance Sheet Risk, Foreign Exchange Risk,

Internal Control and Compliance Risk and Money Laundering risk.10Leasing companies follow the Bangladesh

Bank Guidelines for managing core risk in addition to their own practices.

Basel-I Accord was promulgated in 1988 by Basel Committee on Banking Supervision to address mainly

credit risk. But it failed to fully address credit risk. As a result, Basel committee decided to draft a new version of

accord in 1999 which is known as Basel- II accord. Basel-II is recommendatory framework for banking supervision,

issued by the Basel Committee on Banking Supervision (BCBS) on June 2004. The objective of Basel-II is to bring

about international convergence of capital measurement and standard in the banking system.11 To cope with the

international best practices and to make the financial institutions capital more risk sensitive as well as more shock

resilient, “Guidelines on Risk Based Capital Adequacy for Banks (revised regulatory capital framework in line with

Basel-II") was introduced by Bangladesh Bank from January 01, 2009. The guidelines of RBCA have come fully into

force from January 01, 2010. The guideline is compulsorily followed by all commercial banks in Bangladesh. Basel-II

has been implemented in the NBFIs since January 01, 2012. Prudential Guidelines on Capital Adequacy and Market

Discipline (CAMD) have been issued by the Bangladesh Bank to promote international best practices and to make the

4 H.K. Mohajon, “The Lease Financing in Bangladesh: A Satisfied Progress in Business and Industrialization,”

International Journal of Finance and Policy analysis 4, no.1, (January 2012): 3. Retrieved from http://mpra.ub.uni-

muenchen.dc/50862 on July 7, 2015. 5 Ibid., 59. 6 James C. Van Horne and John M. Wachowicz Jr. Fundamentals of Financial Management, 11th ed. (New

Delhi: Prentice Hall of India, 2005), 95. 7 I M Pandey, Financial Management, 8th ed. (New Delhi: Vikas Publishing House PVT. Ltd., 2005), 574. 8 IDLC Finance Ltd., Annual Report 2012 (Dhaka: IDLC Finance Ltd., 2012), 28. 9 Bangladesh Bank, Guidelines on Risk Based Capital Adequacy for Banks (Dhaka: Bangladesh Bank, 2008),

01. 10 A R Khan, Bank Management: A Fund Emphasis (Dhaka: Brother’s Publications, 2008), 342. 11 L.R. Chowdhury, A Text Book on General Banking, 2nd ed. (Dhaka: L.R. Chowdhury, 2015), 342.

http://mpra.ub.uni-muenchen.dc/50862%20on%20July%207



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capital of NBFIs more risk-based as well as more shock resilient.12 NBFIs have to follow the guidelines as statutory

compliance.13

The Basel-II framework was introduced to ensure that financial institutions maintain adequate capital to

cover all types of risks not just credit risk as required in Basel-I. Basel-II accord dictates that financial institutions

should maintain capital to cover credit risk, market risk and operational risk. The Basel-II accord is based on three

pillar approaches which are as follows:

Pillar-1: it is about minimum capital requirement (MCR) to control risk factors.

Pillar-2: It is about supervisory Review Process (SRP) which is aimed at maintaining adequate capital to

control risk and building a robust risk management framework.

Pillar-3: It is about market discipline/disclosure requirement which is aimed at disclosing overall risk

position of the financial institutions.14

This accord outlines the level of capital required by financial institutions against various types of risk

including credit, market and operational risk based on risk profile of the organization. To make the financial

institutions capital more risks sensitive as well as to build the industry more shock absorbent and stable, Prudential

Guidelines on Capital Adequacy and Market Discipline (CAMD) for financial institutions were developed. The

instructions regarding minimum capital requirement, supervisory review process and disclosure requirement as stated in CAMD

guidelines have to be followed by all leasing companies for the purpose of statutory compliance Pillar-1 (Minimum Capital

Requirement): This is a calculation of minimum capital requirement considering different risk such as credit risk,

market risk and operational risk. According to Bangladesh Bank’s instruction, all financial institutions have to

maintain regulatory Capital Adequacy Ratio (CAR) at minimum 10% of Risk Weighted Assets (RWA) with core

capital (Tier-1) not less than 5% of RWA15.

Pillar-II (Supervisory Review Process): This pillar is based on the principle that capital adequacy is not just a

compliance matter and it is equally important that the financial institutions should have a robust risk management

framework. It has two key elements:

▪ A financial institution should develop an Internal Capital Adequacy Assessment Process (ICAAP)

▪ Supervisory Review of the internal capital assessment and the robustness of risk management process,

system and controls.16

Pillar-III (Market Discipline): Market discipline focuses on the effective public disclosures to be made by financial

institutions and it is a complement of the other two pillars. Effective disclosure is essential to ensure that market

participants can better understand financial institutions risk profiles and the adequacy of their capital.17 Implementation

of Basel-II in leasing companies enhances their managerial capabilities in risk management. All the leasing companies

have already established Basel Implementation Committees. Basel-II framework completely ignored the necessity of

SWOT and PASTEL analysis as tools of effective risk management. The present study emphasizes on conversion of

threats and weakness into strengths and opportunities that ultimately will contribute a lot in strengthening Prudential

Guidelines developed by the Bangladesh Bank in line with Basel-II framework for effective risk management of

leasing companies.

3. Literature Review

Leasing companies can be thought of as an alternative source of financing to meet the demand of capital for

investment. So, the sector warrants extensive study to explore different dimensions of leasing business in Bangladesh.

There were quite a few numbers of studies regarding leasing business in Bangladesh. But those studies lack in terms

of giving exposure on risk management practices along with SWOT and PESTEL analysis of leasing companies.

Jahur and Quadir (1998)18 evaluated the performance of some selected leasing companies in 1998 in terms

of operational performance and financial performance. They found that the leasing companies need to develop their

12 Bangladesh Bank, Prudential Guidelines on Capital Adequacy and Market Discipline for Financial

Institutions (Dhaka: Bangladesh Bank, 2011) 1. 13 Bangladesh Bank, Annual Report 2014-2015 (Dhaka: Bangladesh Bank, 2015), 63. 14 Bangladesh Bank, Prudential Guidelines on Capital Adequacy and Market Discipline for Financial

Institutions (Dhaka: Bangladesh Bank, 2011) 1-2 15 Ibid.,5. 16 Bangladesh Bank, Prudential Guidelines on Capital Adequacy and Market Discipline for Financial

Institutions (Dhaka: Bangladesh Bank, 2011) 2. 17 Ibid., 2 18 Mohammad Saleh Jahur and S.M. Nasrul Quadir, “Performance Evaluation of some Leasing Companies in

Bangladesh,” The Chit6tagong University Journal of Commerce 14, (1998): 187-206.


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professionals and should come in the market with new strategies. They suggested legal reforms in order to make

leasing more competitive and acceptable. Despite risk management has close relations with performance; it was not

discussed in the paper.

Islam (1999)19 in his study, attempted to explore the historical background of leasing business, the

advantages and disadvantages of lease financing in 1999. He also identified the strength and weakness of leasing in

his study. He advocated adopting IAS-17 to bring about harmonization in lease reporting. He opined that

competition in the leasing market would be the main challenge for leasing companies in future. He mainly used case

study method where he studied IDLC, ULC and PLC to comment about the strength, weaknesses and problems of

leasing companies in Bangladesh but impact of SWOT mix on risk management was not highlighted.

Chaudhury (1999)20 discussed non-bank financial institutions as the new trend in financial system of Bangladesh in

1999. He identified inadequacy of legitimate and regulatory structure as the main problem of the sector. He also

observed that lack of coordination among different regulatory agencies hampers development of the sector.

Islam, Bhuiyan and Rounak (2009)21 examined lease financing business in Bangladesh in 2009 with special

reference to IDLC Finance Ltd. They detailed types of leasing objectives, functions of leasing companies and

problems faced by leasing companies in Bangladesh. They also identified the factors contributing to the

development of leasing business in Bangladesh. But the study did not cover the risk management practices of

leasing companies. They mainly analysed ROA, ROE, NPAT, EPS etc. to show the performance of IDLC Finance

Ltd.

Ahmed, Pandit and Hossain (2013)22 undertook an extensive study on operational risk management in

banks in 2013 that explored different dimensions of operational risk. They identified that operational risk

management in Bangladeshi financial institutions was heavily dependent on capital maintenance rather than

focusing on other mitigation techniques such as insurance, disaster recovery systems, business continuity plans etc.

They also emphasize the need for a strong database to move from simpler approach to advanced approach of risk

management.

Chowdhury (2014)23 in his study analyzed the financial performance of some selected leasing companies in

Bangladesh in 2014 on the basis of growth percentage and ratio analysis of some company specific variables. He tried

to shed light on the determinants of net profitability of selected leasing companies. He used regression analysis between

net income and some variables like operating income, operating expense, lease and advances, deposits and branches.

He also tried to focus on the future prospects of leasing industry in Bangladesh. He observed that political stability and

overall economic development were the pre-condition for the smooth growth of the sector. His research was based on

published financial statements of selected companies, i.e., he used only secondary data. He purposively selected 7

companies out of the population of 22. He also used some information from Bangladesh Bank and Bangladesh

Securities and Exchange Commission. The collected data were analyzed through various statistical measures like

growth percentage, regression, correlation coefficient etc.

Rahman, Rahman and Azad (2015)24 that there are variations in understanding of risk (risk awareness), using

risk management techniques as well as mitigation techniques between conventional banks and Islamic banks. They

explored that conventional banks used advanced methods of risk identification, risk management, and risk mitigation

but the Islamic banks gave more emphasis on traditional methods as they have shortage of qualified bank officials. A

19 Muhammad Azizul Islam “Growth and Development of Leasing Business in Bangladesh: An Evaluation,”

Khulna University Studies 1 no. 2, (December, 1999):311-317. 20 Abdul Jalil Chaudhury, “An Appraisal of Non-Bank Financial Institutions in the context of Economic

Development of Bangladesh,” Bank Parikrama XXIV, no. 1 (March, 1999): 171-194. 21 Mohammed Nazrul Islam, Mohammad Badruzzaman Bhuiyan and Nafisa Rounak, “Lease Financing

Business in Bangladesh: A Study on IDLC Finance Ltd.,” The Bangladesh Account 63, no.34 (April-June, 2009):

21-29. 22 Md. Nehal Ahmed, Atul Chandra Pandit, and Md. Zakir Hossain, “Operational Risk Management in Banks:

Issues and Implications,” Banking Research Series 2013, A Compilation of Research Workshop Keynote Papers,

Bangladesh Institute of Bank Management, (July 2014), 67. 23 Sarahat S. Chowdhury, “Growth and Prospect of Leasing Industry in Bangladesh: A Study Based on

Performance Evaluation of Selected Leasing Firms,” International Journal of Advances in Management, Economics

and Entrepreneurship 01, no.05 (September, 2014):01-13. Accessed July 25, 2015, online at: www.ijamce.info. 24 Muhammad Mahbubur Rahman, Md. Azizur Rahman, and Md. Abul Kalam Azad, “Risk Management

Practices in Islamic and Conventional Banks of Bangladesh: A Comparative Analysis,” Asian social science 11, no.

18 (June, 2015): 153-163. doi:10.5539/ass.v11n18p153



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total of 14 commercial banks were purposively selected, 7 each from conventional and Islamic banks for study. Only

people associated with risk management were made the respondents and data were collected by structured

questionnaire. The sample size was 140. The collected data were analyzed to know risk management practices, risk

management techniques and risk mitigation procedures.

Chowdhury (2015)25 emphasised the necessity of risk management and risk-based supervision in financial

institutions in Bangladesh perspective. According to him, risk-based supervision is an important part of overall risk

management of a banking or financial system. Risk-based supervision is a process used by the regulatory authority

to evaluate the ability and success of financial institutions to identify measure, monitor and control credit risk,

interest rate risk, liquidity risk, operational risk, foreign exchange risk, compliance risk and reputational risk. He

mentioned that in the framework of risk-based supervision, the supervisors needed to identify the key risks that

financial institutions face and assess the significance of those. He argued for strong corporate governance system for

effective risk-based supervision. He also advocated for risk-based supervision as an integral part of overall risk

management of financial institutions that can make financial sector sound, stable and risk resilient.

Alam and Mahmud (2015-16)26 evaluated the performance of some selected NBFIs in 2015-16 based on

annual report data over a six-year period of time. They examined the trends of investments, lease & loans, total

assets, total liabilities, profit after tax, return on equity and return on assets as the indicators of performance. They

found Profit after Tax was not as good as expected; the ROE and ROA were not also as good as expected.

Performance has close relationship with risk management which was not highlighted in the paper.

Ahmed (2016)27discussed in detail different dimensions of business risk management of enterprises.

According to him, awareness of risk needs to be increased as the business environment has become less stable these

days. Since, consequences of risk management failure can be dire, it is necessary to develop and incorporate a

strong, consistent, effective and a holistic risk management programme in the strategic planning and control which

can mitigate and manage risk. He emphasized on risk identification, risk assessment and finding ways of avoiding

and reducing risks. He mentioned that business risk management should form an integral part of strategic planning

and control.

SWOT mix of leasing companies and their probable impact on risk management and financial performance

of leasing companies was not considered in any of the literature reviewed. The present study emphasizes on

identification of proper success factors, weakness factors, opportunities available and challenging issues thereon

along with possible impact on risk management practices of leasing companies of Bangladesh.

4. Theoretical and Conceptual Framework

SWOT is the acronym of strength, weakness, opportunity and threat. SWOT analysis is a technique of analysing the

business in terms of its strengths, weaknesses, opportunities and threats. It is basically performed for the products

and services produced by the organisation and for the markets it operates in for future growth. The SWOT analysis

helps the business identify its strengths & weaknesses and opportunities & threats present in the sector it operates in.

Strengths and weaknesses are internal factors over which the business has control and these can be managed by the

organisation to attain the objectives and to survive in the industry it belongs to28.Strength is the characteristic of

business that has huge favourable implications. It gives the business a kind of competitive edge over others.

Strengths should be exploited properly for achieving growth and objectives of the business. It includes adequacy of

capital, efficient human resources, loyal customer base, technology and other precious resources. Weaknesses are

the factors associated with the products and services of the organisations that have adverse impacts on the growth

and profitability of the business. Weaknesses put the business at disadvantageous situations as compared with the

competitors. High employee turnover, high cost of funds, ineffective risk management, lower productivity etc. are

the weaknesses of the business. Opportunities and threats are external factors on which the organisations have no

control.29

Opportunities are the external factors that arise due to the changes in market, technology, government

policies etc. These factors can have positive implications on growth and therefore, should be exploited properly for

25 Shitangshu Kumar Sur Chowdhury, “Risk Management and Risk-based Supervision: Some selected Issues and

Bangladesh Perspective,” Magazine of the Ansar –VDP Unnayan Bank, September 2015, 54-60. 26 Shah Alam and Appel Mahmud, “Performance Evaluation of Non-Bank Financial Institutions of Bangladesh:

A Trend Analysis,” Journal of Business Research 1, no.1 (December 2015-16): 55-64. 27 Md. Mustaq Ahmed, “Importance of Business Risk Management (BRM) to Strategic Planning and Control,” The

Bangladesh Accountant (January-March, 2016): 72-79. 28 Philip Kotler, Marketing Management, 11th ed.(New Jersey: Prentice Hall., 2003), 104 29 Ibid 102


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the growth and profitability of the business30. Ample investment opportunities, availability of market information,

competitions in the market etc. can be regarded as the opportunities of the business.

Threats refer to the possible risks that originate from external factors which are out of control of the organisation.

These elements can cause havoc for the business31. Every business organisation need to have contingency plans to counter

these threats. Changes in government policies, emergence of new technologies, economic recession, political unrest, drastic

price reduction by the competitors etc. can be regarded as threats for the business. For attaining the objectives of the business,

it is absolutely necessary to incorporate the SWOT mix in the strategic plans of the business. Two methods are in use for

applying the results of SWOT analysis to strategic decisions. Those are referred to as “Matching” and “converting”32.

Matching: In this method, strengths are matched to opportunities to gain competitive advantage. For

example, surplus funds of a company can be efficiently allocated for new investment opportunity that helps the

company grow further.

Converting: Here, threats and weaknesses are converted into strengths and opportunities respectively.

PESTEL analysis is a framework or tool used for analysis of various macro-economic factors which have

impact on the performance of the organisation. The result of PESTEL analysis is of use to identify threats and

weaknesses of the organisation which are important factors considered in SWOT analysis. Every business

organisation has to operate in an external environment which is composed of several dimensions like political,

economic, social, technological, environmental and legal dimensions33. PESTEL analysis encompasses all these

dimensions. PESTEL is the acronym of the previously mentioned dimensions of external environment within which

a company has to operate. It is used when the company launches a new product or explores a new route to a market

or sells product or services in a new country or region.

5. Statement of the Problem

Since leasing companies operate in the financial service industry, they are exposed to several risks both internally as

well as externally. To safeguard the organization’s resources from these risks, the companies need to develop proper

risk management framework as a strategic response which requires detailed SWOT and PESTEL analysis. Very few

leasing companies are found to use SWOT and PESTEL analysis to develop risk management framework to address

the threats of different types of risk. The present study is expected to contribute a lot in this regard.

6. Objectives of the Research

The general objective of the study is to assess the practices of the sample companies regarding use of SWOT and

PESTEL analysis as tools of risk management. The specific objectives are:

▪ To trace the major challenges of leasing companies along with their inherent strength, weakness and

opportunities;

▪ To analyses the impact of SWOT mix on the risk management of leasing companies;

▪ To assess the PESTEL scenario of the sample companies;

▪ To assess the perceptions of the executives of the sample companies regarding SWOT mix;

▪ To develop the strategic response for addressing the weaknesses and countering the threats;

7. Methodology of the Research

Both purposive and random samplings were followed in the study. 11 Companies were selected purposively and

branches of the companies were selected randomly by using Probability Proportional to Size (PPS) sampling. 11

selected companies have 94 branches. To ensure adequate representation, 47 branches of the selected companies

were chosen through Probability Proportional to Size (PPS) sampling (50% of the total number of branches).

The study used both primary and secondary data. Primary data were the opinions and ideas of the executives

and branch managers. Secondary data were the publications of the companies (mainly annual reports). Four executives

from Head Office of each company and two officials including the branch manager of each of the branches were

requested to respond to the questionnaire. The respondents were 138 in number.

Since leasing companies operate in the financial service industry, they are exposed to several risks both

internally as well as externally. To safeguard the organisation’sresources from these risks, the companies need to

develop proper risk management framework as a strategic response which requires detailed SWOT analysis. The

30 Ricky W. Griffin, Management , 7th ed. (Boston, New York : Houghton Mifflin Company, 2002), 233 31Ricky W. Griffin, Management , 233 32 P. Kotler, K.L. Keller, M. Brady, M. Goodman and T. Hansen, Marketing Management (New Jersey: Pearson

Education Inc., 2009), 125. 33 Ricky W. Griffin, Management, 72-75.


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perceptions of the executives of the sample companies regarding SWOT mix are statistically shown in the following

pages. Data regarding this were collected from primary sources by questionnaire survey. The respondents were

requested to specify their level of agreement on each statement in a five-point Likert scale, being 1=Strongly Disagree,

2=Disagree, 3=Neutral, 4=Agree, 5=Strongly Agree. Some secondary information was also taken from the annual reports

of sample companies.

8. Techniques of Analysis

The collected data were analysed by using SPSS and results were presented in terms of mean, standard deviation and

coefficient of variation. One of the major objectives of the study is to trace the major challenges of leasing companies

along with their inherent strength, weakness and opportunities. The researcher has identified strengths, weaknesses,

opportunities and threats of leasing companies by rigorous study of related literature and by holding discussions with

the high officials of the sample companies.

9. Major Findings of the Study

Table 1: Responses to the strengths

Items Mean

Score

Maximum Minimum Standard

Deviation

Ranking on the

basis of mean

Score

Strength

The company has adequate funds to

undertake new ventures.

4.22 5 2 .82 1

The company has a very effective

internal control system.

4.21 5 2 .68 2

The company practices participatory

management approach that ensures

cordial working environment.

3.85 5 2 .85 4

Reduced rate of interest on loan and

deposits.

3.68 5 2 .94 5

Adequate refinancing facilities of

Bangladesh bank

4.11 5 2 .70 3

Average 4.01

Source: Questionnaire survey

Identification of strengths of companies is a crucial issue as it helps optimum utilization of resources. The

researcher identified a total of five strengths of leasing companies which were listed in the personally administered

questionnaire and the respondents were asked to give their responses. Table1 shows that the mean scores of

responses to the strengths are in between 4.22 to 3.68 and the average of the mean scores is 4.01 which is more than

the mid-point of five-point Likert scale. It indicates that the respondents also acknowledge the points mentioned in

Table-1 as the strengths of leasing companies. Highest mean score of responses of 4.22 is found with the company’s

adequacy of funds to undertake new venture. So, it is the major strength of leasing companies. The second highest

mean score of 4.21 is found with the existence of effective internal control. So, effective internal control is the next

important strength of leasing companies as it plays pivotal role in risk management. Then the respondents prioritized

adequate refinancing facilities of Bangladesh Bank, participatory management practices for cordial working

environment and reduced rate of interest on loans and deposits as the strengths of leasing companies which is clearly

reflected in the rank column of Table1. Standard deviations of responses to the identified strengths are less than one

indicating less variation from the mean as well as greater stability in strength.

Table 2: Responses to the Weaknesses

Weaknesses Mean

Score


Deviation

Ranking on the

basis of mean Score

Cost of funds of your company is

high.

3.87 5 1 1.24 1

Your company has high employee

turnover.

2.10 4 1 .80 5


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Workers and employees of your

company are not very cooperative.

1.75 3 1 .52 7

Productivity of your company is not

high.

1.76 3 1 .58 6

Risk management of your company

is not that much effective.

2.18 5 1 .96 4

Inadequate publicity and

advertisement.

2.80 4 1 1.09 3

Provision for controlling director’s

loans is inadequate.

3.30 5 1 1.34 2

Average 2.54


The researcher identified seven weaknesses of leasing companies and those were listed in the questionnaire.

The respondents were asked to provide their responses to the weaknesses in a five-point Likert scale. It is evident in

Table-2 that the mean responses to the weaknesses are in between 3.87 to 1.75 and the average of the means is only

2.54 which is much lower than the mid-point of the five-point Likert scale. It indicates that the respondents do not

agree fully with the researcher regarding the weaknesses of leasing companies. The findings clearly show that only

two weaknesses namely cost of funds of leasing companies are high and provisions of controlling director’s loans is

inadequate have got mean scores of responses of more than 3. It indicates that the above mentioned two weaknesses

are the most visible among the leasing companies.

Table 3: Responses to the opportunities

Opportunities Mean

Score


Deviation

Ranking on

the basis of

mean Score

There is ample investment

opportunity.

3.96 5 2 .93 4

Availability of trained human

resources in the market.

4.08 5 2 .86 3

Market information is available. 3.71 5 2 .77 5

Demand of funds is very high. 3.59 5 1 1.05 6

Fair competition in the market. 4.28 5 3 .75 2

The country has perfect capital

market.

2.16 5 1 1.01 7

Prospect of further growth is

high.

4.32 5 3 .72 1

Political stability in the country. 1.90 5 1 .67 8

Average 3.50


Every business organisation need to identify opportunities that can be explored for achieving wealth

maximisation objective of the business. Leasing companies are no exceptions. The researcher identified a good

number of opportunities of leasing companies that can be tapped for the profit and wealth maximisation. The

opportunities were listed in the questionnaire for the responses of the company executives in a five-point Likert

scale. The mean scores of responses to the opportunities mentioned in Table-3 are in between 4.32 to 1.90 and the

average of the mean scores is 3.50 which is well above the mid-points of five-point Likert scale. It indicates that the

respondents are in agreement with the researcher regarding opportunities of leasing companies. The highest mean

score of responses of 4.32 is found with prospect of further future growth which is really compatible with the

national growth rate of the economy. Since, the economy has been growing at the rate of more than 6%, the leasing

companies will definitely have various new investment opportunities which will help the sector grow further. The

second and third highest mean scores of responses of 4.28 and 4.08 are found with market competition and

availability of trained human resources respectively. Other opportunities are prioritized as ample investment

opportunities, availability of market information, high demand of funds etc. The respondents do not admit that the


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capital market in Bangladesh is perfect and the country has political stability which is reflected from their responses

shown in Table-3. So, those two items are not in a position to be accepted as the opportunities for leasing companies at

the moment. The standard deviations of responses to all the opportunities indicate less variation from the mean scores

which indicates greater stability in opportunities.

Table 4: Responses to the threats

Threats Mean

Score


Deviation

Ranking on the

basis of mean

Score

Vulnerable risk environment. 3.71 5 1 3.41 5

Unfavourable monetary

policy.

3.38 4 1 .73 7

Diversion of funds to the

sector which is not meant for.

3.99 5 1 1.01 2

Unfair competition. 3.94 5 1 .75 3

Natural calamities. 3.94 5 1 .73 4

Lack of congenial investment

climate.

4.19 5 1 .73 1

Unfavourable fiscal policy. 3.41 5 1 .79 6

Average 3.79


The leasing industry as a whole is faced with some challenges/threats which are pointed out and set in the

questionnaire by the researcher for responses of the respondents in a five-point Likert scale. The results of responses

are shown in Table -4. The mean scores of responses to the threats are in between 4.19 and 3.38 and the average of

the mean scores is 3.79 which is more than the mid-point of five-point Likert scale. It is an indication that the real

threats of leasing companies have been identified. The highest mean score of responses of 4.19is found with lack of

congenial investment climate followed by diversion of funds with a mean score of 3.99. These two are the biggest

challenges faced by the leasing companies. Other threats according to ranking are unfair competition, natural

calamities, vulnerable risk environment, and unfavorable fiscal and monetary policies.

Table 5: Indicators of Strength and Weakness of Leasing Companies Based on Secondary Data

Strengths Weaknesses

Indicators of Strength 10 Year Average Result Indicators of

Weakness

10 Year Average

Result

Equity Growth 25.46% Growth of Classified Loans 53.98%

Asset Growth 25.57% NPL Ratio 6.67%

Deposit Growth 33.94% Cost of Fund 12.41%

Investment Growth 74.99%

Value Added Growth 65.25%

Avg. ROA 3.07%

Avg.ROE 16.12%

Avg. Operating Ratio 32.36%

Source: Researcher’s own calculation from data provided in annual reports of sample companies.

Table-5 demonstrates the indicators of strength and weakness of sample companies based on 10-year data.

Average investment growth for the study period was 74.99% which indicates ample investment opportunities. Other

indicators show very good figures representing stability of strengths for the sample companies. On the other hand,

average growth of classified loans for the sample companies is 53.98% which is extremely high indicating high

credit risk for the sector as a whole. The average non-performing loan ratio and average cost of fund are 6.67% and

12.41% respectively which are very high indicating weakness of sample companies in credit risk management.


10

10. SWOT Analysis of IDLC Finance Ltd as the Bench-mark

IDLC Finance Ltd. holds the top position among the sample companies in respect of most of the dimensions in

general and risk management in particular. So, SWOT analysis of IDLC Finance Ltd. as a strategic response to risk

factors can be regarded as the bench-mark for the other companies in the industry. In this segment of the study, the

SWOT analysis of IDLC Finance Ltd. is discussed in detail as follows

Table 6: Factors Narrating the Strengths

Strengths Strategic Response

The IDLC as a brand. IDLC continues to invest in the brand to strengthen

its image as a responsible and reputed NBFI.

Need based products and superior service

standards.

Continues innovation in products and services.

Quick decision making. Investment in process and technology for achieving

stronger efficiency in this regard.

Transparent and ethical. Train the new recruits on the code of ethics and

values.

Training, counseling and business facilitation

services.

Launch new non-financial services and expand the

horizon for existing business facilitation services.

Strategically located branches. Continue to expand strategically by covering

unreached regions and populations.

Uninterrupted service delivery infrastructure Continue investments in process and technology to

achieve superior efficiency; enable higher levels of

process automation.

Stringent regulatory adherence Continue to abide by the law of the land in both letter

and spirit.

Collaborative and proactive approach towards

regulatory and industry reform initiatives.

Continue to collaborate with the regulators, peers and

other industry participants and adopt best practices.

Respectable institutional shareholding; experienced

and professional Board of Directors and visionary

management.

Continuous efforts to make best use of experience of

the Board and management.

Competent and empowered human resources. Continue investing in people as they are the principal

driving force of the company.

Focused on continuous training and development. Continue need-based training programmes and

promote leadership from within.

Highest levels of integrity. Educate new employees on IDLC moral codes, values

and ethics.

A wining culture fostered through years of

embracing best-in-class practices.

Continue to innovate and improve; continue to

uphold the culture of trying new things without the

fear of failure.

Solid capital base. Increase capital through the right issue to further

strengthen the capital base which will strengthen the

growth platform.

Efficient asset-liability management. Continue good practices, utilise bonds to minimise

asset-liability mismatch.

Sound and steady ROA and ROE. Continue to deliver superior financial results and

maintain shareholder return.

Table 7: Indicators of Basic Weaknesses

Weaknesses Addressing the weaknesses

Dependence on interest income as a major

revenue source- a limitation of being an NBFI.

Introduce fee-based services. Continue to diversify through

subsidiaries –IDLCIL, IDLCSL and IDLCAML. Introduce

fee-based products like “Easy Invest” among others.

Dependence on term lending in the absence of

transactional accounts- a limitation being an

Continue innovating new products and focus on the

niche market.


11

NBFI.

Portfolio concentration in Dhaka and adjacent

areas as most of the distant branches are

established in the last 4-5 years.

Continue to grow the loan portfolio in the distant

branches. Continue to focus on SME. Reach new areas

with home loan products to build a sustainable portfolio.

Table 8: Available Opportunity Factors

Opportunities Capitalising on opportunities

Providing 360-degree financial services

to all customer segment- deposit

products, loans, brokerage, investment

management and advisory.

With the establishment of asset management business, IDLC will

have full range of wealth management services to offer through

its subsidiaries. IDLC also expect to capitalise on the reputation

of the IDLC brand to offer customers customised and

comprehensive financial solutions.

Green financing Endeavour is on to tap the benefits of this new concept of

financing. IDLC has already established Green Banking Unit for

ensuring sustainable development and preservation of

environment.

Opportunity for co-branding and

business partnership.

IDLC always emphasize on building partnership with competent

parties to reap the benefits for the shareholders.

Table 9: Exposure of Threats

Threats Countering threats

Intense competition in corporate lending driving

commercial banks to focus more on SME and

consumer financing.

Continue providing best-in-class services to all

customers.

New industry entrants providing stiff competition Innovate, automate and invest to reduce loan TAT

further.

Excess liquidity and lack of investment

opportunities driving sector participants towards

unhealthy price wars to grab the best customers.

Chose customer/market segments carefully by

identifying niche opportunities.

Extend the presence of IDLC to all parts of the

country. Create a market for home loan and continue

to invest in supplier finance.

Promote fee-based products like “Easy Invest” more.

Source: Annual Report (2015) of IDLC Finance Ltd.

By going through the SWOT analysis of IDLC Finance Ltd. it is clear that various risk factors associated

with the business of IDLC can be reduced to a considerable extent by using the analysis. So, the experience of IDLC

can be of immense value for other companies in the industry.

Table 10: SWOT Mix and Its Impact on operational Performance of Leasing Companies

(Based on analysis of primary data and practices of IDLC Finance Ltd)

Strengths Impacts

Adequate funds to undertake new venture. May help the company grow further and maximise

shareholder’s value.

Effective Internal Control May help reduce credit and operational risk to great extent.

Adequate refinancing facilities of Bangladesh

Bank.

Reduce reliance on costly bank financing.

Participatory management approach for

cordial working environment.

May help achieve organisational goals smoothly.

Reduced rate of interest on loan and deposit. May help increase spread and maximise return.

Stringent regulatory adherence. May minimise all kinds of risks.

Training, counseling and business facilitation

services.

May help increase fee-based income and expand the

business.

Continuous training and development. May help reduce risks and improve performance.


12

Efficient asset-liability management. May enable the companies reduce liquidity risk and market

risk.

Uninterrupted service delivery infrastructure. May enable the companies to render efficient services and

maximise return to the shareholders.

Quick decision making May help the companies reap the benefits of new

opportunities.

Need based products and superior service

standards.

May help capture greater market share and maximise


Transparent and ethical. May help develop good image as well as good brand.

Weaknesses Impacts

Cost of funds is high. Spread will be lower and therefore profitability will also be

lower.

Provisions for controlling director’s loans are

inadequate.

May result in excess credit risk.

Dependency on interest income as a major

revenue source.

May increase credit risk.

Dependency on term lending. May increase credit risk as the loans given may become

bad.

Portfolio concentration in Dhaka and adjacent

areas.

The company cannot take the benefits of investing in other

areas of the country.

Opportunities Impacts

Prospect of further growth is high. May help expand the business and increase


Competition is there in the market. May help the company increase efficiency.

Availability of trained human resources in the

market.

The companies can reduce operational risk to

considerable extent by recruiting trained human

resources.

There are ample investment opportunities. The companies can grow further by diversifying

investment portfolio.

Market information is available. May help the companies make correct investment

decisions.

Demand of funds is very high. May promote term lending and increase interest

income.

Providing financial services to all customer segment-

deposit products, loans, brokerage, investment

management and advisory.

May help achieve diversifications and maximise

return to the shareholder’s value.

Green financing May ensure sustainable development, preservation

of environment and harness the benefits of that new

concept of financing.

Threats Impacts

Vulnerable risk environment. May create adverse impact on performance.

Diversion of funds to the sector which is not meant for. May aggravate credit and liquidity risk.

Unfair competition. May result in adverse impact on performance.

Natural calamities. May result in loss of investment and loss of

income.

Lack of congenial investment climate. May prevent the companies to grow further.

Intense competition in corporate lending driving

commercial banks to focus more on SME and consumer

financing.

The leasing companies are supposed to lose

market share to commercial banks and

experience reduction in income.

New industry entrants providing stiff competition Older companies are supposed to lose market


13

share to the new entrants.

Excess liquidity and lack of investment opportunities

driving sector participants towards unhealthy price wars

to grab the best customers.

May result in Opportunity cost, reduction of

interest spread and loss of profitability.

Source: Questionnaire Survey and Annual Reports of Sample Companies.

11.Addressing the Weaknesses and Countering the Threats

Weaknesses Addressing the weaknesses

Cost of funds is high. The leasing companies need to introduce low cost deposit products to

mobilise funds.

Provisions for controlling director’s

loans are inadequate.

Stringent regulatory guidelines should be framed to control director’s

loans.

Dependence on interest income as a

major revenue source.

Introduce fee-based services.

Dependence on term lending. Continue innovating new products and focus on the niche market.

Portfolio concentration in Dhaka

and adjacent areas.

Continue to grow the loan portfolio in the distant branches. Continue

to focus on SME. Reach new areas with home loan products to build

a sustainable portfolio.

Threats Countering Threats

Vulnerable risk environment. Follow regulatory guidelines and adopt risk mitigation

techniques.

Diversion of funds to the sector which is not

meant for.

Frame new rules to prevent this practice.

Unfair competition. Regulators like Bangladesh Bank and BSEC need to

provide necessary guidelines to ensure level playing field

for the banking companies as well as leasing companies.

Natural calamities. Take sufficient insurance coverage to compensate direct

loss and consequential losses.

Lack of congenial investment climate. Government need to ensure political stability and

discipline in financial sector that will create proper

investment climate.

Intense competition in corporate lending

driving commercial banks to focus more on

SME and consumer financing.

Continue providing best-in-class services to all customers.

New industry entrants providing stiff

competition

Innovate, automate and invest to reduce loan TAT further.

Excess liquidity and lack of investment

opportunities driving sector participants

towards unhealthy price wars to grab the best

customers.

Chose customer/market segments carefully by identifying

niche opportunities.

Extend the presence of the company to all parts of the

country. Create a market for home loan and continue to

invest in supplier finance.

Promote fee-based products like “Easy Invest” more.

12.PESTEL Scenario of Sample Companies

PESTEL is the acronym of political, economic, social, technological, environmental and legal dimensions within

which a company has to operate. It is used when the company launches a new product or explores a new route to a

market or sells product or services in a new country or region.


14

Table 11: PESTEL Analysis for Sample Leasing Companies

Macro-economic Factors Impact on the Industry Strategic Responses

Political Factors:

Political stability ensures congenial

investment climate which is a pre-

requisite for growth and

development of every business

organisation.

The business of sample leasing

companies gets momentum for

stable political environment and

credit and operational risk may

reduce. But all the companies

should put efforts to keep non-

performing loans within tolerable

limit.

The sample companies need to focus on

good loan portfolio, continuous loan

monitoring, and investment friendly

environment.

Economic Factors:

Bangladesh consistently maintained

over 6% growth rate of GDP during

last five years. In spite of political

turmoil, the country’s GDP grew

6.55% in 2014-2015 fiscal year. A

strong growth of GDP is expected

in the coming years.

Credit growth in private sector

will increase and leasing

companies will be able to get rid

of excess liquidity by

diversifying their investment

portfolio. The companies will

get the benefits of investments

made in the prior years.

The sample companies need to grow in new

areas like SME financing, IT sector and agro

based products to take the advantages of

strong GDP growth. Expansionary monetary

policy of the government will create new

avenues for financing and the sample

companies need to capitalise on that. But they

have to make sure that there is adequate

system to control risks.

Social Factors:

Bangladesh has already crossed the

threshold of lower middle-income

status in 2015 and is on the track of

becoming middle income country

by 2021. The standard of living has

improved a lot and a huge market is

on the making for the newly

achieved purchasing power.

The business of leasing

companies will be greatly

affected as it is necessary to take

into account the customer needs

and demands and accordingly,

quality of financial services

need to be improved.

The rise of the middle-class with strong

purchasing power will create ample

opportunities for consumer financing

including home-loans. The sample

companies need to capitalise on this

opportunity with wide range of products

and services.

Technological Factors:

With the emergence of internet and

digitised service facilities,

customers have become much more

sophisticated globally as well as in

Bangladesh.

To cater the needs of the

sophisticated customers, huge

investment will be required in

technology to keep pace with

the competitors. Operational risk

may originate for the failure of

the technology.

The companies must develop efficient

human resource so that they can reap the

benefits of digitisation to the fullest

extent. Capable internal control system

needs to be developed to reduce the

operational risks that exist in the digitised

world.

Environmental Factors:

Financial service industry around

the globe is increasingly

emphasizing on green and

environment friendly business.

The regulators like Bangladesh

Bank, BSEC etc. Will frame

new regulatory guidelines for

the financial institutions for

sustainable financing.

Bangladesh Bank has already

earmarked separate funds for

green financing offers that can

be availed of by the sample

companies.

Some of the NBFIs like IDLC have

already established green banking units

for ensuring sustainable development in

this regard. Other companies also need to

respond positively to this new concept of

financing.

Legal Factors:

Financial service industry is faced

with tighter rules and regulations

and their applications these days.

The regulators are applying

stringent rules to ensure level

playing field and to guard against

financial frauds.

The leasing companies will have

to focus on adequate

provisioning of loans and

ensuring capital adequacy to

absorb the shocks of various

risks.

The companies need to employ separate

compliance team to look after different

compliance issues. They also need to keep

continuous contact with the regulators for

ensuring compliance.

Source: Researcher’s own analysis by going through annual reports of sample companies and other published

materials.


15

13. Conclusion

Adequacy of funds and effective internal control were identified as the main strengths whereas high cost of funds

and inadequate provision of controlling director’s loans were the main weaknesses. Prospect of future growth,

market competition and availability of trained human resources are the opportunities and lack of congenial

investment climate and diversion of funds are the biggest threats of leasing companies. From the discussions made

so far regarding SWOT Mix and PESTEL analysis of leasing companies it is clear that SWOT Mix and PESTEL

both analyses have considerable impact on risk management practices of leasing companies. Based on the data

collected through questionnaire survey and annual reports, the researcher has mentioned the possible ways of

addressing the weaknesses and countering the threats. An efficient SWOT and PESTEL analysis will definitely help

the companies develop an effective risk management framework that will keep all sorts of risks within control.

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IDLC Finance Ltd. Annual Report 2010-15. Dhaka: IDLC Finance Ltd. 2010-15.

International Leasing and Financial Services Ltd. Annual Report 2010-15. Dhaka:2010-15.

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Appendix

Questionnaire

On

SWOT mix and PESTEL Analysis: Effective Tools of Risk Management of Leasing Companies

For Executives (Head office & Branch Level)

(Assalamu-alaikum, I the undersigned, associate professor, accounting ,Nawabganj Govt. College, Chapai Nawabganj,

requests for your kind cooperation for providing information on the above mentioned research topic. Assurance is

given that the information will be used only for academic purpose and strict secrecy will be maintained.)

1. Respondents Particulars:

a) Name of the respondent:

b) Designation:

c) Education:

d) Experience:

e) Training:

f) Division/Department and name of the company:

Information regarding SWOT mix:(Please put tick mark in the box.)

SN Items SD D N A SA

1 ➢ Strength

a) Your company has adequate funds to undertake new ventures.

b) Your company has a very effective internal control.

c) Your company practices participatory management approach that ensures cordial

working environment.

d) Reduced rate of interest on loan and deposits.

e) Adequate refinancing facilities of Bangladesh bank

2 ➢ Weakness

a) Cost of funds of your company is high.

b) Your company has high employee turnover.

c) Workers and employees of your company are not very cooperative.

d) Productivity of your company is not high.

e) Risk management of your company is not that effective.

f) Inadequate publicity and advertisement.

g) Provision for controlling director’s loans are inadequate.

3 ➢ Opportunities

a) There are ample investment opportunities.

b) Availability of trained human resources in the market.

c) Market information is available.

d) Demand of funds is very high.

e) Competition is there in the market.

f) The country has perfect capital market.

g) Prospect of further growth is high.

h) Capital market is efficient.

http://dx.doi.org/%2010.5539/ass.v11n18p153

http://dx.doi.org/%2010.5539/ass.v11n18p153


17

4 ➢ Threats

a) Vulnerable risk environment.

b) Unfavourable monetary policy.

c) Diversion of funds to the sector which is not meant for.

d) Unfair competition.

e) Natural calamities.

f) Lack of congenial investment climate.

g) Unfavourable fiscal policy.

Note: SD=Strongly Disagree, D=Disagree, N=Neutral, A=Agree, SA=Strongly Agree

DR. MD. AMINUL ISLAM

Associate Professor, Accounting

Nawabganj Govt. College, Chapai Nawabganj.

Cell No. 01715081755, Email: [email protected]

Tables Showing Analysis of Data

Table 1: Mean values, standard deviations, maximum values and minimum values of ROA of sample companies.

Name of companies Mean (In

%)

Std.

Deviation

Maximum Minimum

IDLC FinanceLimited 2.55 1.23 5.35 1.52

United Finance Ltd. 2.30 .77 4.09 1.75

Uttara Finance and Investment Ltd. 3.43 1.72 5.27 .26

MIDAS Financing Ltd. 1.92 3.46 5.06 -5.61

First Finance Ltd. 5.76 3.92 14.26 .74

Bay Leasing and Investment Ltd. 3.26 2.94 10.65 1.15

International Leasing and Financial Services Ltd. 1.63 1.05 4.05 .40

People's Leasing and Financial Services Ltd 3.72 1.87 7.37 .88

Premier leasing and Finance Ltd. 1.55 1.01 3.08 .27

BD Finance and Investment Company Ltd. 3.22 3.60 12.59 .40

Lanka-Bangla Finance Ltd 4.32 2.51 9.52 1.26

Total 3.07 2.63 14.26 -5.61

Source: Annual Reports of sample companies.

Table 2: Mean values, standard deviations, maximum values and minimum values of ROE of sample companies.


%)

Std.

Deviation

Maximum Minimum


United Finance Ltd. 15.47 4.50 26.20 12.20

Uttara Finance and Investment Ltd. 19.77 10.60 33.74 1.19

MIDAS Financing Ltd. 1.34 33.49 29.77 -87.00

First Finance Ltd. 16.79 7.95 32.61 4.86


International Leasing and Financial Services Ltd. 14.37 11.16 31.00 -2.87

People's Leasing and Financial Services Ltd 20.19 9.24 30.59 4.78

Premier leasing and Finance Ltd. 12.25 4.71 20.88 4.98

BD Finance and Investment Company Ltd. 14.05 10.18 33.16 2.03


Total 16.12 14.77 49.69 -87.00


Table3: Mean values, standard deviations, maximum values and minimum values of operating ratio.

Name of companies Mean (In %) Std. Deviation Maximum Minimum




MIDAS Financing Ltd. 68.84 74.70 236.06 19.63

mailto:[email protected]


18



International Leasing and Financial Services Ltd. 37.88 17.25 72.34 14.43





Total 32.36 27.99 236.06 1.57


Table 4: Mean values, standard deviations, maximum values and minimum values of Non-Performing Loan ratio of

sample companies.


%)

Std.

Deviation

Maximum Minimum

IDLC FinanceLimited 2.61 .84 3.97 1.63

United Finance Ltd. 3.58 .61 4.61 2.86




Bay Leasing and Investment Ltd. 5.19 .49 5.91 4.60






Total 6.67 4.92 32.86 1.56


Table 5: Mean values, standard deviations, maximum values and minimum values of cost of funds of sample

companies.

Name of companies Mean (In %) Std. Deviation Maximum Minimum












Total 12.41 2.53 22.00 6.70


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swot mix and pestel analysis: effective tools of risk

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