Abstract
Background Under the rapid change of the global financial environment, the risk control of the credit granting is viewed as the foremost task to each bank. With the impact one by one from financial crisis and European debt crisis, the steady bank business is also facing the severe challenge. Banks approve the credits for their customers and then make money from the interest.Case presentation Credit granting is not only the primary job but also the main source of income. The quality of credit granting concerns not just the reclaims of creditor’s rights; it also affects the successful running of banks.Discussion and EvaluationTo enhance the reliability and usefulness of bank credit risk assessment, we first will delve in the facets and indexes in the bank credit risk assessment. Then, we will examine the different dimensions of cause–effect relationships and correlations in the assessment process. Finally, the study focuses on how to raise the functions and benefits of the bank credit risk assessment.ConclusionsIn those five credit risk evaluation dimensions, A “optional capability” and D “competitiveness” are of high relation and high prominence among those dimensions, influencing other items obviously. By actively focusing on these two dimensions and improving their credit risk assessment ability will solve the foremost problems and also solve other facets of credit risk assessment problems at the same time.
Highlights
The so-called bank credit risk management is through the establishment of credit granting policies, instructions, and coordination between the different sections in the bank, such as the full supervision and control of customers’ credit investigation, choices of payment methods, confirmation of the credit limit, and reclaims of the sum of money, banks are guaranteed to retrieve the receivables back in time safely (Aebi et al 2012; Benjamin and Charles 2014; Swami 2014).there exists the phenomenon of “credit paradox” in the practice of credit risk management
To enhance the reliability and usefulness of bank credit risk assessment, we first will delve in the facets and indexes in the bank credit risk assessment
Questionnaires were distributed to 18 Taiwan bank credit managers with more than 20 years of work experience
Summary
There exists the phenomenon of “credit paradox” in the practice of credit risk management. This so called “credit paradox” is, on one hand, the risk management theory demands banks follow principles of the investment decentralization and diversification in bank credit risk management, to prevent the concentration of the credit. (1) For most small–medium sized corporations without credit ratings, the credit situation is reveled by the long-term business partnership between the firms and banks. This way of partnership and information gained tends to make the banks execute loan business with the acquainted business clients. The quality of credit granting concerns not just the reclaims of credi‐ tor’s rights; it affects the successful running of banks
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