Using Environmental and Social Information in Lending Decisions

Elsakit, Omer; Worthington, Andrew C.

doi:10.5539/ijef.v5n1p112

Cited by 4 publications

(4 citation statements)

References 19 publications

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“…This agrees with the Ismail (2016), Elsaldt & Worthington (2013), Mio & Marco (2013), Al-shekhali (2012), and Thompson & Cowton (2004) studies which indicated that, credit officers need extra information to assess the risks that may affect the companies' ability to repayment and that disclosing the financial, strategic, economic, environmental and social information enhances the decisions of credit officers when taking the credit decision, and that there is a significant role to the variables of credit granting decision in taking the banking credit decision at Jordanian commercial banks.…”

supporting

confidence: 92%

The Effect of Information Content of Integrated Business Reports on the Credit Decision Making at Jordanian Commercial Banks

AL-Shatnawi¹,

Al-Haija²

2018

IBR

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The current paper tested the effect of the information content of integrated business reports in enabling credit officers at Jordanian commercial banks to assess the company’s capability to create value, and the effect of the so mentioned on credit decision making in the Jordanian environment. To achieve this objective, the researcher presented one of Jordanian companies’ financial reports through a proper comprehensive questionnaire, distributed over a sample of credit officers at Jordanian commercial banks, through three alternatives of accounting disclosure which include: traditional financial reports that express financial disclosure only, traditional financial reports in addition to non-financial information in the form of separated reports, and then integrated business reports (consolidated financial and non-financial information). The number of the analyzed questionnaires was 95. Arithmetic means, standard deviations, Simple Liner Regression analysis and One Way ANOVA analysis have been applied to test the research hypotheses and achieve its objectives. The results showed that there is an effect for the disclosure of (only financial information through traditional financial reports, non-financial information through separated reports, and consolidated financial and non-financial information through integrated business reports) in order to take the decision of credit at Jordanian commercial banks. The research also showed that there are significant differences between the variables of the decision of granting loans according to the three disclosure alternatives. It is noted that the information content of the integrated business reports had the greatest effect than the other two alternatives on the decision of granting credit.

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supporting

confidence: 92%

The Effect of Information Content of Integrated Business Reports on the Credit Decision Making at Jordanian Commercial Banks

AL-Shatnawi¹,

Al-Haija²

2018

IBR

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“…Elsakit and Worthington [30] explored the extent to which banks and lending institutions consider information other than financial when analyzing customer information for loan application. Particularly in developing countries, banks and lending institutions enforce the use of environmental and social information when evaluating a loan request rather than promote this requirement by the power of the law.…”

Section: Factors Affecting Risk Managementmentioning

confidence: 99%

“…Particularly in developing countries, banks and lending institutions enforce the use of environmental and social information when evaluating a loan request rather than promote this requirement by the power of the law. In developing countries, the process of making lending decisions without taking the impact of external environment is risky, because the external environment includes legal environment, awareness of society, the ability of the client to produce such information, and perception of environmental and social responsibility [30].…”

Section: Factors Affecting Risk Managementmentioning

confidence: 99%

Evaluation of Cooperative Risks in Eastern Visayas: Basis for the Development of Risk Management Manual

Rufin,

Arceño

2023

JEMT

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This study evaluated the risk exposure of cooperatives in Eastern Visayas as basis for the development of a comprehensive risk management manual. The research provided a detailed overview of cooperative profiles, encompassing factors such as membership, asset size, loan portfolio, savings/deposits, equity, and years of operation. The examination extended to the assessment of risk levels across institutional, financial, operational, and external dimensions. Employing a descriptive survey methodology, the study utilized a validated self-made survey schedule as the primary data-gathering instrument for risk assessment. Data analysis involved the application of statistical measures such as arithmetic mean, Pearson correlation, risk severity matrix, and standard deviation. The sample comprised thirty (30) credit and multi-purpose cooperatives, representing 75% of medium and large cooperatives in Leyte, Southern Leyte, Biliran, and Samar provinces. Results indicated an overall low risk level for cooperatives in the institutional, financial, operational, and external dimensions. Particularly, the financial aspect exhibited the highest mean score compared to other risk categories. Factors like the number of members, asset size, loan portfolio, and equity demonstrated significant correlations with identified risks, except for members' savings deposits and years of existence. The study highlighted that the top 5 specific risks carried a combination of high and medium probabilities and impacts. Mitigation strategies, including an internal control system and internal audit, emerged as crucial measures to manage these risks. These strategies were subsequently incorporated into the developed risk management manual, which is recommended for implementation by cooperatives as a proactive measure.

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“…He was actually highlighting the deficiency in legislation, which does not hold banks accountable for financing polluting projects. Elsakit and Worthington [2013] mentioned the risks associated with the environmental issue, namely; indirect risk, direct risk and reputational risk. The first two result from the existence and implementation of environmental legislation.…”

Section: Legislation and Risks Associated With Environmental And Soci...mentioning

confidence: 99%

Bank Use of Corporate Social Responsibility and Sustainability Information in Lending Decisions

Elsakit

Worthington

2019

Corporate Social Responsibility, Ethics and Sustainable Prosperity

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This chapter uses a survey of personnel in Libyan commercial banks, including general managers and credit managers, to investigate how banks perceive and process social responsibility and sustainability information declared by potential borrowers in their credit applications and other documentation. In particular, the chapter considers how the backgrounds and experiences of key bank staff in lending decisions may bias toward or against lending with the disclosure of potential borrower information on social responsibility and sustainability. We also consider the impact of institutional features, particularly the stance of government, in shaping these perceptions and links with action via regulation and the possible influence of business ethics through industry associations.

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Using Environmental and Social Information in Lending Decisions

Cited by 4 publications

References 19 publications

The Effect of Information Content of Integrated Business Reports on the Credit Decision Making at Jordanian Commercial Banks

The Effect of Information Content of Integrated Business Reports on the Credit Decision Making at Jordanian Commercial Banks

Evaluation of Cooperative Risks in Eastern Visayas: Basis for the Development of Risk Management Manual

Bank Use of Corporate Social Responsibility and Sustainability Information in Lending Decisions

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