THE EFFECTS OF GLOBALIZATION ON CREDIT RISK
In modern economic conditions, where every economic sector (even financial) is not immune to the effects of globalization, risk management has emerged as one of the greatest challenges that managers need to manage. Traditional lending operations by collecting deposits and their placement as loans, are operations over which rarely any bank relies nowadays. Credit risk is defined as the probability of default in time to perform its obligations, or to repay the principal debt and interest according to the contractual terms, and the costs of hedging credit risk from year to year require special attention. It is particularly after 2008, when the financial sector was hit by the terrible collapse of real estate prices collapse which severely hit the banks, because of inadequate risk management and the use of modern methods of financing, such as securitization. These negative effects, has only showed the genuine power of globalization, and the fact that the world is a global village. So today, when the fall in the price of oil and raw materials due to the slower growth of the global economy begins to flow again in the financial sector, pushed a big pressure on banks, which must find ways to cope with the new risks imposed. The subject of research in this paper will be the credit risk, as one of the most typical banking risks and one of the biggest risks for banks, and the impact of globalization on it.