A Model for Managing Legal Risks in Iran's Banking Industry

Document Type : Scientific research

Authors

• soran rashidi ¹
• Seyed Mohammadreza Miri Lavasani ²
• Mehdi Montazer ³

¹ Soran Rashidi, PhD student in Finance-Financial Law, science and research branch, Islamic Azad University, Tehran, Iran.

² Seyed Mohammadreza Miri Lavasani ,Assistant professor, department of management environmental, Faculty of natural resources and environment, science and research branch, Islamic Azad University, Tehran ,Iran .

³ Mehdi Montazer, Assistant Professor, Private Law, Faculty of Human Sciences, Damavand Branch, Islamic Azad University , Tehran, Iran.

10.22067/economlaw.2024.85623.1334

Abstract

The purpose of this study is to identify legal risks in the banking industry and provide a model for managing these risks. In this regard, the research method is integrated (qualitative and quantitative). The qualitative part of the research was conducted using foundational data theory and through semi-structured in-depth interviews with 15 banking experts through purposive sampling. The results of the three stages of open, central and selective coding in the qualitative part state that the formation of legal risks is a function of causal conditions, background conditions and intervention. Based on this, as a result of these interactions, three general forms of risk were identified, including strategic legal risks, operational legal risks, and transactional legal risks. These risks have adverse consequences, including financial crimes, weakening of public relations, prosecution, increased financial losses, violation of laws and regulations, and decreased customer satisfaction. The quantitative part of the research was also done with the partial least squares approach. The statistical sample in the quantitative section is 100 managers and employees of the banking sector. Based on this, the designed model has been approved in the qualitative section. Therefore, according to the 17 identified strategies for managing these risks, it is concluded that by recognizing and managing legal risks in the banking sector, it is possible to prevent adverse consequences and financial losses for banks.

Keywords

• Economic Law Risk
• Banking
• Mixed method

Main Subjects

• Banking law

References

 

Refrence

Alfieri, A. V. (2005). The fall of legal ethics and the rise of risk management. Geo. LJ, 94, 1909.‏

Amukwa, J. N. (2020). The Kudu gas project: an analysis of the legal risk to the development of offshore upstream gas operations (Doctoral dissertation, University of Pretoria.

Andriani Rahayu, A. (2018). The implementation of risk management and its effect on good cooperative governance and success. Journal of Indonesian Economy and Business, 33(3), 243-256.

Bank of England (2000). Oversight of payment systems. Quoted by McCormick 2006, p. 107.

Basel Committee on Banking Supervision (2006). International Convergence of Capital Measurement and Capital Standards. A Revised Framework, Comprehensive Version. Bank for International Settlements.

Beecher, B., & Streitwieser, B. (2019). A risk management approach for the internationalization of higher education. Journal of the Knowledge Economy, 10(4), 1404-1426.

Bento, R. F., Mertins, L., & White, L. F. (2018). Risk management and internal control: A study of management accounting practice. In Advances in Management Accounting. Emerald Publishing Limited.‏

Castets-Renard, C., Besse, P., Loubes, J. M., & Perrussel, L. (2019). Encadrement des risques techniques et juridiques des activités de police predictive. Technical and Legal Risk Management of Predictive Policing Activities.‏

Falta, M. (2017). Hauptprozess Legal Risk Management. In Praxishandbuch Legal Operations Management (pp. 655-679). Springer, Berlin, Heidelberg.

Grigg, N. S. (2020). Uncertainty and legal risk management. ASCE-ASME Journal of Risk and Uncertainty in Engineering Systems, Part A: Civil Engineering, 6(3), 06020001.

Gidado, S. D., & Umoru, T. A. (2020). Ratings of Business Educators on Influence of Business Education on Acquisition of Marketing. Business Legal and Risk Management Skills by Students in Colleges of Education in North-Central Nigeria.

Mbugua, J. K., Otuya, R., & Muhanji, S. (2020). Effect of Political/Legal Risk Management on Performance of Commercial Real Estate Entrepreneurial Investments in Kenya. International Journal of Academic Research in Business and Social Sciences, 10(5), 507-521.

McCormick, R. (2010). Legal risk in the financial markets. Oxford University Press on Demand.‏

NURUL, H. (2019). Research on Legal Risk in Enterprise Management. Scientific and Social Research, 1(1).

Popadić, S. N. (2021). prevention in Serbia and l Legal prevention and legal challenges of legal risk management. Environmental Science & Policy, 116, 213-219.‏

Salehi, Hamidreza. (2022). ISO 31000 risk management case study: Iran Tablo Company). Accounting and Management Perspective), 5(66), 33-41«(In Persian)»

Shafii Bafti, Afshin, (2022), risk management in financial markets, the fifth international conference on interdisciplinary studies in management and engineering, Tehran. «(In Persian)»

Song, S. Y. (2019). Managing Trade Secret Legal Risks for Food Company in China. In Finance and Strategy Inside China (pp. 67-76). Springer, Singapore.‏

Te, P. (2016). Risk Management in Banking Principles and Framework. london: Oxford Fajar Sdn. Bhd.

Naseri, Alireza. (2017) The legal aspects and effects of compliance with laws and regulations in Iran's insurance industry and international commercial insurances, the third international conference on jurisprudence and law, advocacy and social sciences, Hamedan.

Yu, Y., Chan, A. P., Chen, C., & Darko, A. (2018). Critical risk factors of transnational public–private partnership projects: Literature review. Journal of Infrastructure Systems, 24(1), 04017042