Credit Risk Management of Property Investments through Multi-Criteria Indicators

Abstract

The economic crisis of 2008 has highlighted the ineffectiveness of the banks in their disbursement of mortgages which caused the spread of Non-Performing Loans (NPLs) with underlying real estate. With the methods stated by the Basel III agreements, aimed at improving the capital requirements of banks and determining an adequate regulatory capital, the banks without the skills required have difficulties in applying the rigid weighting coefficients structures. The aim of the work is to identify a synthetic risk index through the participatory process, in order to support the restructuring debt operations to benefit smaller banks and small and medium-sized enterprises (SME), by analyzing the real estate credit risk. The proposed synthetic risk index aims at overcoming the complexity of Basel III methodologies through the implementation of three different multi-criteria techniques. In particular, the integration of objective financial variables with subjective expert judgments into a participatory process is not that common in the reference literature and brings its benefits for reaching more approved and shared results in the debt restructuring operations procedure. Moreover, the main findings derived by the application to a real case study have demonstrated how important it is for the credit manager to have an adequate synthetic index that could lead to the avoidance of risky scenarios where several modalities to repair the credit debt occur.

Unleashing the behavioral factors affecting the decision making of Chinese investors in stock markets

“…Regarding loss aversion, investors acknowledge it as a prevalent behavior among their peers; however, they recognize that it can result in poor trading decisions that negatively influence investors’ wealth. This perspective aligns with the viewpoints of previous studies [ 52 ]. The notion is that prior gains can fuel a sense of greed, pushing investors to seek even greater profits by investing more capital.…”

“…As a result, investors might have accumulated greater knowledge and skills, allowing them to leverage diverse information sources prior to making investment decisions. Consequently, the effect of herding may have diminished over time [ 48 , 51 , 52 ]. Farber, et al [ 53 ] emphasize the significant prevalence of the herding effect within Vietnam’s stock market, particularly directed toward positive market returns.…”

Dataset Modelling of the Financial Risk Management of Social Entrepreneurship in Emerging Economies

“…This research is based on the following work in the sphere of financial risk management in entrepreneurship: Bakos and Dumitras , cu (2021), Bouri et al (2021), Dalwai and Salehi (2021), Duygun et al (2020), Elkhal (2019), Lasloom (2021), Locurcio et al (2021), Sabău et al (2021), and Syed and Bawazir (2021).…”

Blockchain-driven framework for financing credit in small and medium-sized real estate enterprises

“…Various solutions have been proposed to address the issues at hand. These include establishing inter-agency trust through credit guarantees (Liang et al, 2017), optimizing credit rating methods (Locurcio et al, 2021), and utilizing online financial platforms to facilitate financing (Zhong and Jiang, 2021). Although these studies have improved the transparency of information and applicability of credit evaluation to some extent, the entire evaluation process is still centrally managed by a third party, which cannot guarantee authenticity and availability (Ma et al, 2022).…”

“…These include establishing inter-agency trust through credit guarantees (Liang et al. , 2017), optimizing credit rating methods (Locurcio et al. , 2021), and utilizing online financial platforms to facilitate financing (Zhong and Jiang, 2021).…”