Banking credit worthiness: Evaluating the complex relationships

Bai, Chunguang; Shi, Baofeng; Feng, Liu; Sarkis, Joseph

doi:10.1016/j.omega.2018.02.001

Cited by 109 publications

(42 citation statements)

References 51 publications

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“…Credit evaluation by financial institutions is used to measure the ability of client to repay their proposed credit facility. Credit risk evaluation aims to classify the clients with ‘good credit’ with proven repayment capacity and those with ‘bad credit’ with a high probability of default, where this is defined as creditworthiness (Genriha and Voronova 2012 and Bai et al 2019 ). The key term of creditworthiness is “worthy”, whereby if the banks are confident that the potential clients will honor their obligations in timely manner, then the clients can be considered to be deemed creditworthy (Osondu and Obike 2015 ).…”

Section: Literature Reviewmentioning

confidence: 99%

Identifying Creditworthiness Criterions and Financing Approval Process of Islamic Banks in Indonesia

Imaduddin

Sharofiddin

2021

The Importance of New Technologies and Entrepreneurship in Business Development: In the Context of Economic Diversity in Develo

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The study aims to identify the creditworthiness criterions and approval factors in providing financing facility to corporate and commercial clients of Islamic banks in Indonesia. It also explores the financing approval process in the Islamic bank for this segment. It employs qualitative study of in-depth and semi-structured interviews method via the available online tool. The study selects 3 (three) Islamic bank officers from the different banks as the respondents. The study finds that the 5Cs elements are all important by emphasizing in proper fixed asset collateral and sound capacity of the clients. There is a typical internal approval process with the timing is different between each bank. It highlights the importance of financial covenants and the requirement to use CASA products. The study also reveals that covid-19 pandemic has impacted the client’s business and its ability to repay the banks. The strategy is to conduct relaxation, reprofiling, and restructuring of the client’s facilities as per guideline from regulator.

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Section: Literature Reviewmentioning

confidence: 99%

Identifying Creditworthiness Criterions and Financing Approval Process of Islamic Banks in Indonesia

Imaduddin

Sharofiddin

2021

The Importance of New Technologies and Entrepreneurship in Business Development: In the Context of Economic Diversity in Develo

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“…Age and age square of household heads might link to knowledge, experience, economic decision-making and life cycle to earn income [8].…”

Section: Control Variablesmentioning

confidence: 99%

Does the Method of Entrusted Lending via Farmer-Based Unions Facilitate Low-Income Households’ Access to Bank Credit? Evidence From Northwestern Vietnam

Luan¹

2020

TNUJST

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Mục đích của bài viết này nhằm kiểm định giả thuyết cho rằng phương thức cho vay ủy thác thông qua các tổ chức của nông dân có ý nghĩa trong khắc phục bất cân xứng thông tin và thúc đẩy tiếp cận tín dụng ngân hàng của các hộ gia đình. Bài viết sử dụng mô hình hồi quy logistic, với dữ liệu được thu thập từ khảo sát 548 hộ trồng quế ở Tây Bắc, Việt Nam. Kết quả cho thấy thành viên trong các tổ chức nông dân tạo điều kiện cho các hộ gia đình tiếp cận với tín dụng ngân hàng không cần tài sản thế chấp. Các tổ chức hội giúp ngân hàng lựa chọn tốt hơn các hộ gia đình có nhu cầu vay vốn, tổ chức cho vay theo nhóm, qua đó giảm rủi ro và chi phí giao dịch. Thành công của các tổ chức hội có thể do họ đã khai thác kiến thức địa phương để tiến hành cho vay theo nhóm, qua đó giúp khắc phục bất cân xứng thông tin trong thị trường tín dụng nông nghiệp. Cần tổ chức các khóa đào tạo thường xuyên cho cán bộ của các hội và các tổ tiết kiệm, vay vốn để thu hẹp khoảng cách tín dụng; xây dựng sở dữ liệu số để chia sẻ thông tin giữa các ngân hàng và các hội liên quan đến các vấn đề ủy thác cho vay. Kết quả nghiên cứu cũng đề xuất các can thiệp chính sách khả thi để giải quyết vấn đề bất cân xứng thông tin trong thị trường tín dụng nông nghiệp.

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“…Karminsk [6], Geng et al [7], Figby et al [8] respectively applied Ordered Probit Regression, oneway ANOVA, and Survival Duration models to explore the indicators that influence credit risk. Shi [9,10] analyzed customers' credit qualification by the Fuzzy rough set method and F test method. Zhang [11] applied genetic algorithm to analyze the credit rating of customers.…”

Section: Literature Reviewmentioning

confidence: 99%

Decision tree for credit scoring and discovery of significant features: An empirical analysis based on Chinese microfinance for farmers

Chi

Zhang

2018

Filomat

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For the tens of thousands of farmers? loan financing, it?s imperative to find which features are the key indicators affecting the credit scoring of rural households. In this paper, C5.0, CHAID and C&RT three models are used to screen the key indicators affecting farmers? credit scoring, and 2044 farmers? microfinance data from 28 provinces in China are applied in the empirical study. The empirical results show the classification accuracy of C5.0 is better than CHAID and C&RT in both the training set and test set, thus finally use the feature subset selected by C5.0. Six key features screened from 44 attributes by C5.0, which have significant influence on credit scoring of farmers, namely, education level, net income each year/per capita GDP, education cost of children each year, Residence type, residential year, relationship with cosigners.

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Banking credit worthiness: Evaluating the complex relationships

Cited by 109 publications

References 51 publications

Identifying Creditworthiness Criterions and Financing Approval Process of Islamic Banks in Indonesia

Identifying Creditworthiness Criterions and Financing Approval Process of Islamic Banks in Indonesia

Does the Method of Entrusted Lending via Farmer-Based Unions Facilitate Low-Income Households’ Access to Bank Credit? Evidence From Northwestern Vietnam

Decision tree for credit scoring and discovery of significant features: An empirical analysis based on Chinese microfinance for farmers

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