Corporate Credit Scoring Model of Banking Sector in Indonesia

Credit Scoring Modelling For Corporate Banking Institutions

“…In Indonesia, credit scoring has been applied to BIs in mitigating credit risk, but its existence is mostly used to analyze creditworthiness for prospective personal debtors (Simatupang et al, 2023). In previous research, not much credit scoring has been built to analyze the eligibility of prospective corporate-level debtors; moreover, no one has considered aspects of corporate credit rating in credit scoring modeling (Simatupang et al, 2023;Van et al, 2012), even though it was recorded in 2022 that credit growth of 11.35% (yoy) was supported by corporate and household credit demand (Indonesian Economic Report, 2022) (Hu, & Su, 2022) predicted the credit risk of corporate customers of commercial banks by building an Artificial Neural Network model.…”

“…In Indonesia, credit scoring has been applied to BIs in mitigating credit risk, but its existence is mostly used to analyze creditworthiness for prospective personal debtors (Simatupang et al, 2023). In previous research, not much credit scoring has been built to analyze the eligibility of prospective corporate-level debtors; moreover, no one has considered aspects of corporate credit rating in credit scoring modeling (Simatupang et al, 2023;Van et al, 2012), even though it was recorded in 2022 that credit growth of 11.35% (yoy) was supported by corporate and household credit demand (Indonesian Economic Report, 2022) (Hu, & Su, 2022) predicted the credit risk of corporate customers of commercial banks by building an Artificial Neural Network model. This article selects 14 financial indicators to build a credit risk evaluation index system including current ratio, quick ratio, debt asset ratio, equity ratio, return on net assets, operating profit ratio, price to earnings ratio, total asset turnover, accounts receivable turnover, inventory turnover, current assets turnover, operating income growth rate, total assets growth rate, operating profit growth rate; and compares the prediction performance to select the best model to achieve the prediction and evaluation of commercial bank corporate customers' credit risk.…”