Credit granting sorting model for financial organizations

Paulo Cesar Schotten,Danielle Costa Morais,Leydiana De Sousa Pereira

doi:10.1186/s40854-021-00315-4

Abstract

Considering the environment of risks and influences inherent in the decision-making process for credit-granting operations, it has become a matter of survival for financial organizations to seek to improve how they engage in effective decision-making to ensure that their returns on invested capital will meet the expectations established at the beginning of the process. A credit-granting sorting model for financial organizations is proposed. The model aggregates the perspectives of different decision-makers to support an organization in the process of credit analysis and, consequently, to improve its operationality. The decision-making model is based on the ELECTRE TRI-B multicriteria method. It sorts credit-granting proposals into three classes, namely credit approved, technical analysis, and credit rejected. The group decision emerges from the decision rules of the organization’s executive board. This new proposed approach to dealing with credit-granting results in the systematization of credit analysis, reduction of doubt among decision-makers, avoidance of the emergence of informal groups, reduction of conflicts within a financial organization, and external interferences.

Highlights

The decision-making process is fundamental for organizations, especially those that deal with a risk environment
With regard to the approaches related to the strategic design of the decision that must be made (Table 1) and the environment and operations in which financial organizations are embedded (Table 2), understanding these approaches leads to developing a strategic vision for granting credit based on a multicriteria decision for ordering, selecting, sorting, or describing alternatives within a decision-making process involving multiple criteria
The results presented, using the decision rules suggested, at first sight, overload the professional responsible for the technical analysis, which would imply that the organization needs to invest in this sector with more employees or at least provide technological support so that the process becomes agile and efficient

Summary

Introduction

The decision-making process is fundamental for organizations, especially those that deal with a risk environment. Schotten and Morais (2019) argue that the decision-making process of financial entities requires continuous assessment and must systematically meet their expectations. These authors point out that credit operations involve significant risks, and the decisions made by a group are not limited to the consideration of a single individual but rather the perceptions of many people who, after having been prepared to participate in the process, can contribute to the depth of the analysis and exert greater assertiveness

Objectives

Methods

Conclusion