Credit Department Research Articles

The challenges in integrating ESG factors into banks’ credit department: a knowledge management enhanced framework

PurposeAssuming that knowledge management is a pivotal issue in business to improve and maintain competitive advantages, this paper aims to investigate how knowledge management is useful to face challenges about the integration of environment, social and governance (ESG) factors, filling the gap in the literature regarding knowledge management and ESG in the banking world by considering a real case.Design/methodology/approachStarting from the analysis of the more relevant literature on the topic, this paper describes an illustrative real case through interviews with the credit department of an Italian bank that has adopted a specific sustainability approach. This paper discusses this case in the context of the outlined theoretical background to explore the trends and challenges of ESG integration. The case study allows us to evaluate and expand our theoretical framework, leading to a greater understanding of the complex phenomenon under investigation.FindingsBased on the analysis of the literature combined with the insights that emerged from the experience of the real case, this study shows that there are three primary factors to consider: data issues, competencies and workflow. This study outlines an enhanced knowledge management framework displaying the complexity emerging from the integration of ESG into a bank’s credit department and identify the best practices to pursue.Practical implicationsGiven the increasing pressure toward the incorporation of ESG factors into the banking sector, the practical implications of the study are relevant as they provide guidelines for action. Specifically, the practical problems highlighted by the real case, like the priority on themes such as questionnaires, the need for ad hoc commissions and workflow, drive the attention of decision-makers on key aspects to effectively adopt an advanced knowledge management approach aimed at improving the ESG integration. Considering the effect of the banking system on the economy, the best practices this study has identified can also have a positive impact on society as a whole.Originality/valueThe proposed enhanced knowledge management framework offers a guideline to orchestrate ESG integration into banks’ credit departments, considering the increasing need to frame a sustainability-oriented strategic approach that emerges from academic and practical enquiries. This research represents an initial attempt to investigate the integration of ESG factors in the banking system through the lens of knowledge management. The strategic nature of the ESG approach clearly appears in a dynamic environment where stakeholder pressures and regulatory evolutions are strong.

Analisa Laporan Keuangan Nasabah dan Peranannya dalam Pemberian Kredit pada PT Bank Rakyat Indonesia (Persero) Tbk Unit Lubuk Begalung Padang

Financial reports have a dual role as a guide for customers in preparing financial reports and as a source of inspiration for BRI's credit department. Analysis of customer financial reports, supported by financial reports, becomes an integral part of the credit process. Research involves credit monitoring procedures and analysis of customer financial reports. Case studies on Toko Rhio Yudha Gama and Toko Dikcy Oksani Junaidi show positive results in liquidity, solvency and profitability, validating their suitability for obtaining credit with low risk. Analysis of financial ratios, such as current ratio, quick ratio, debt to total asset ratio, and return on equity, provide a satisfactory performance picture. The research conclusion confirms that credit assessment based on analysis of financial statements and profit and loss has great significance. Financial ratios are the main indicator, reflecting whether a customer is worthy of receiving a loan. In addition, BRI Bank determines the loan nominal using Repayment Capacity, which is the customer's repayment capacity of 50% of the net profit in the profit and loss statement.

Analisis Pemberian Pembiayaan Pada PT. BPRS Al-Washliyah Medan

This study aims to determine the procedure for granting credit, as well as the obstacles that occur in collecting non-performing loans at PT. BPRS Al Washliyah Medan. The results showed that the procedure for giving credit to PT. BPRS Al Washliyah Medan has been running well such as customers applying for credit to service customers, filling out the credit application sheet (APK) then given to the credit administration. Then it is handed over to the account officer (AO). The account officer conducts interviews and surveys on the spot. After that, make a credit analysis report (LAK) to be submitted to the credit committee, then decide whether or not the credit application is accepted. The credit administration accepts credit application applications and credit analysis reports to be kept as archives. Furthermore, the credit administration makes a credit approval (SPK) of 2 sheets accompanied by the customer's signature. Sheet 1 is for credit administration and sheet 2 is for customers. Based on the approved SPK, the credit administration makes a credit agreement (PK) of 2 sheets, sheet 1 for tellers and sheet 2 for accounting. The teller notifies the customer about the binding. Furthermore, the customer provides the original guarantee, then the teller realizes and provides credit guarantee to the customer. The original collateral is handed over to the credit administration as an archive. Based on the credit agreement, accounting conducts bookkeeping and submits the credit agreement sheet to the credit administration as an archive. The credit administration received the original guarantee and credit agreement to be used as an archive of PT. BPRS Al Washliyah Medan. Problems in collecting non-performing loans at PT. BPRS Al Washliyah Medan from the banking side minsally in conducting analysis, the manager or credit department is not careful, so that what should happen, is not predicted in advance from the customer. From the customer's own side, credit congestion can occur due to two things, namely: There is an element of intentionality. In this case, the customer deliberately does not intend to pay his obligations to PT. BPRS Al Washliyah Medan, so the credit given is bad. It can be said that there is no security element to pay. The presence of an element is accidental. This means that customers want to pay but can't afford it. Example: credit financed experiencing a disaster such as fire, flood or bankruptcy. So to pay the credit does not exist.

Corporate Governance Practices and Performance of Deposit Taking Sacco's in Nairobi City County Kenya

Good performance of SACCOs is a key ingredient for its continuous existence and sustainability. The financial intermediation function carried out by SACCOs is dependent on how well they perform. Over the years, there have been various concerns by policy makers and academician over the SACCOs' dismal performance in Kenya. Despite the various corporate governance initiatives and measures implemented by important organizations such as the Centre for Company Governance, the issue of firm corporate governance remains unresolved, despite the involvement of the Capital Markets Authority and SASRA. The aim of this research is to determine how the performance of deposit taking SACCOs in Nairobi is influenced by corporate governance. The research focused on how stakeholder involvement, board composition, organizational structure, and control environment affect Nairobi-based deposit-taking SACCOs’ performance. The study's base was stakeholder, agency, stewardship, and resource dependence theory. The study employed a descriptive design. A census approach was used whereby all the deposit taking SACCOs in Nairobi were included in the study. The target population was 47 CEOs, 47 Sacco officers, 47 heads of finance and 47 heads of credit department. Data was gathered using structured questionnaire. In this research, to evaluate the construct and content validity, the researcher did a pilot test. Both descriptive and multiple regression analysis were used to examine the data. The findings showed that corporate governance factors (board composition, organization structure, control environment and stakeholder involvement) had a correlation coefficient (R) of 0.691 with an R squared of 0.477. From the ANOVA table corporate governance had a significant effect on performance of DT Saccos (F=28.513; p= 0.000). From the regression, corporate governance (board composition, organization structure, control environment and stakeholder involvement) had a positive effect on performance of DT Saccos. This study concludes that corporate governance (board composition, organization structure, control environment and stakeholder involvement) has a positive effect on performance of DT Saccos in Nairobi, Kenya. The study recommends that management of DT Saccos improve their corporate governance for increased performance levels. There is need for similar research based on other factors influencing performance, other measures of the variables, other Saccos & institutions as well as adopting secondary data.

Peranan Risk Based Audit Pada Bagian Kredit Dalam Mengevaluasi Proses Kredit

This study aims to determine how the application of Risk-Based Audit on the credit department of PT. BPR Bank Kertiawan in order to improve the efficiency and effectiveness of the entity's internal audit. The results showed that the key business process credit at PT. BPR Bank Kertiawan which has a high risk is the Credit Analysis section which affects the credit take over process and the making of a Credit Agreement and its supporting documents so that for further examination, SKAI will focus on the Credit Analysis section which has a high inherent risk

Financial management practices, competitive advantage and loan performance of selected microfinance institutions (MFIs) in Ghana

AbstractThis study examines how financial management practices and competitive advantage affect loan performance of microfinance institutions (MFIs) in Ghana's Ashanti Region. The research employs a cross‐sectional design with a sample of 85 Ashanti Region MFIs, following Krejcie and Morgan's guidelines for sample selection. Employing a positivist approach with quantitative analysis, primary data comes from closed‐ended questionnaires given to Credit Directors, Credit Department, and Risk Managers, selected randomly from staff lists. Results reveal financial management practices significantly impact loan performance and competitive advantage. However, competitive advantage, under controlled conditions, does not significantly predict loan performance. This highlights financial management's crucial role in shaping loan performance and competitive advantage in MFIs. The study suggests that sustaining growth requires Ghana's Central Bank to enforce adherence to standards for liquidity management. This research adds a fresh perspective to understanding financial management practices, competitive advantage, and loan performance in Sub‐Saharan Africa's MFIs.

Classification of hundreds of classes: A case study in a bank internal control department

The main function of the internal control department of a bank is to inspect the banking operations to see if they are performed in accordance with the regulations and bank policies. To accomplish this, they pick up a number of operations that are selected randomly or by some rule and, inspect those operations according to some predetermined check lists. If they find any discrepancies where the number of such discrepancies are in the magnitude of several hundreds, they inform the corresponding department (usually bank branches) and ask them for a correction (if it can be done) or an explanation. In this study, we take up a real-life project carried out under our supervisory where the aim was to develop a set of predictive models that would highlight which operations of the credit department are more likely to bear some problems. This multi-classification problem was very challenging since the number of classes were enormous and some class values were observed only a few times. After providing a detailed description of the problem we attacked, we describe the detailed discussions which in the end made us to develop six different models. For the modeling, we used the logistic regression algorithm as it was preferred by our partner bank. We show that these models have Gini values of 51 per cent on the average which is quite satisfactory as compared to sector practices. We also show that the average lift of the models is 3.32 if the inspectors were to inspect as many credits as the number of actual problematic credits.

Web-Based Motorcycle Loan Management System with credit risk and approval analysis using Data Mining Techniques

Using information systems can dramatically improve a business's productivity and efficiency. Moreover, the ability of information systems to provide users with the information they need to complete jobs effectively can be the most significant advantage. This project development plan proposes a Web-Based Motorcycle Loan Management System with credit risk and approval analysis using Data Mining Techniques for a private motorcycle dealer who encounters challenges, particularly in the decision-making of motorcycle loans. It will facilitate the automation of business processes, including online motorcycle loan applications and payments, access to real-time data and reporting, and credit risk and approval analysis to assist the credit department in decision- making by applying data mining techniques. The project will employ the Scrum framework for software development and testing method. A total of 150.625 man-days with a total cost of P1,350,231.78 were computed to complete the proposed information system. A one-year financial viability analysis was defined to determine the proposed project's total cost and benefits. Based on the results, time spent on activities is reduced to 89.19%, indicating that the business can handle more applications every day compared to the average twenty daily applications since processing time is significantly decreased. It is recommended for future improvement of this plan to implement Augmented Reality for a better user online experience in previewing motorcycle units.

Influence of Financial Skills of Group Members on Loan Repayment at Equity Bank in Nakuru County, Kenya

Just like other commercial banks, Equity Bank experiences cases of poor loan repayment. The purpose of the study is to assess the influence of the financial skills of group members on loan repayment at Equity Bank in Nakuru County. The study was informed by the social capital theory and financial self–efficiency theory. The study adopted a descriptive research design. The study's target population was 72 credit officers in the six Equity Bank Branches in Nakuru County. The study also targeted 492 chairpersons of groups that are servicing their loans in the six Equity Bank Branches. Since the target population of credit officers was manageable census technique was adopted to incorporate all the 72 targeted officers. For the group of chairpersons, the study adopted slovins' formula to get a sample of 221 groups. In addition, the study adopted stratified random sampling to get the sample of a group in each branch. The study collected primary data. Primary data was collected using questionnaires and an interview schedule. A questionnaire was used to collect primary data from the credit officers. An interview schedule was used to collect primary data from the group chairpersons. Data was collected using the drop-and-pick-later method. A pilot research was carried out at Equity Bank Nyahururu Town in Laikipia County, whereby 7 questionnaires were sent to employees in the credit department. Descriptive and inferential statistics were employed in the study. Descriptive statistics involves using proportions, frequencies, mean and standard deviation. For inferential statistics, correlation and multiple regression analysis were employed to determine the association between the dependent and the independent variables. The results of the analysis were presented in the form of tables. The study concluded that there was a statistically significant relationship between the financial skills of group members and loan repayment at Equity Bank in Nakuru County, with r=0.213 and p=0.004. The study recommended that Equity Bank should encourage their loan officer or the head of each group to have enough information on borrowers' income. This is because information on borrowers' income helps the group make decisions to help, pressure, or impose a penalty on defaulting borrower/s that ensures higher repayment performance and reduces willful defaulters.

Impact Analysis of the Implementation of Sustainable Credit Governance and Corporate Social Responsibility (CSR) During the Covid-19 Pandemic at Bank X and Bank Y

The increasing occurrence of non-performing loans can cause non-performing loans (NPL) loans to rise and have an impact on the Bank. Non-Performing Loan is the main parameter or ratio to measure the level of credit health in the banking sector, NPL consists of non-performing loans, so banks, especially the credit department, must be careful when realizing credit so that the credit is not problematic. This study aims to analyze the relationship between Bank X and Bank Y related to the implementation of credit governance and sustainable Corporate Social Responsibility (CSR) during the COVID-19 Pandemic at Bank X and Bank Y. Implementation of credit governance at Bank X and Bank Y is used as three pillars that are interconnected with Corporate Social Responsibility (CSR) related to credit loans during the COVID-19 era by developing the MSE Funding TJSL program. This is in line with the contribution of Bank X and Bank Y to Sustainable Economic Development (SDGs), namely in goal number 8 of Decent Work and Economic Growth. The implementation of ISO 26000 in organizational governance, fair operating practices, and consumer issues in both banks is well implemented. Sample the study by interviewing 14 respondents and using Content Analysis. The results showed that Bank X and Bank Y have implemented three ESG pillars as sustainable business efforts in Sustainable Banking, Sustainable Operation, and Sustainable Corporate Social Responsibility (CSR) during the COVID-19 pandemic. The two banks, namely Bank X and Bank Y have implemented sustainable business practices (Good) Corporate Governance & Sustainability Business in Banking). The existence of market risk, liquidity, legal risk and reputational risk, the strategic risk to both Banks does not affect the Bank in implementing sustainability practices.

Analysis of the Implementation of Good Corporate Governance Principles in Increasing Lending

This study aims to assess the level of efficiency and effectiveness of the credit department, especially in terms of lending, and to obtain an overview of the principles and principles of good corporate governance in the company's lending procedures. The population in this study were all employees at the Main Branch Office (KCU) Panakukang PT. Bank Central Asia (Persero) Tbk Makassar. The research sample was selected based on specific considerations or criteria from the researcher to get as much information as possible. The source of data in this study is primary data obtained through field research, using data collection techniques in questionnaires and interviews. This research was processed using qualitative analysis techniques—the steps taken by analyzing data reduction, presentation, and concluding. The study results indicate that the implementation of the principles of Good Corporate Governance by Bank BCA has been running very well, which can be seen from the fulfillment of all the principles of Good Corporate Governance in the operations of Bank BCA, especially in terms of lending procedures. This has increased the number of loans and led to a decrease in the ratio of non-performing loans over the last six years

Research on Personal Credit Risk Assessment Based on Data Fusion

In recent years, the domestic emphasis on systemic risk prevention has continued to increase. Chinese credit department, which is a crucial department to avoid significant systemic risks, has a particular responsibility to manage and control personal credit risks related to the lives of the public. Therefore, strengthening the management of the individual credit department, especially to guard against personal credit risks, build a data-driven quantitative model for scoring applicants’ credit, and improve the personal credit identification and evaluation methods on this basis is a vital part of individual credit risk prevention and systemic financial risk. In this paper, we first study the index system of personal credit risk identification, standard personal credit risk identification models, and some data fusion techniques. Then, we build an individual credit risk identification model based on the data fusion method on the above theoretical basis. After that, the selection of indicators was carried out among 20 variables of German credit data. Finally, an empirical study was conducted to compare the effect of the two data fusion methods on the performance of the individual credit risk identification model. The defects of single models in the personal credit risk problem domain are apparent. However, data fusion technology can help classification models to gain better uniformity in accuracy and robustness, but it also needs to be improved in terms of interpretability and promotion.

Lending Principles and Practice in the Banking Sector: A Case Study of Some Selected Private Commercial Banks in Bangladesh.

Purpose: The purpose of the study is to examine whether private commercial banks in Bangladesh follow the lending principles and practice before granting loan to customers. it examined the opinions of participants on lending practices and philosophies within the chosen institutions. Methodology: The descriptive statistics were utilized to make inferences based on the views obtained from the individuals who participated. One hundred (100) questionnaires were given to the credit department and a few personnel of thirteen (13) private commercial banks in the Dhaka metropolitan area. Findings: The study discovered that the chosen private commercial banks employed a variety of lending models, with the Credit Scoring and 5 C’s model being the most often used. In addition, private commercial banks made certain that their borrowing guidelines and procedures were adhered to while making credit to clients. Following the lending principles and practices to grant loans to customers help the commercial banks increase its profitability and decreases the amount of loan default. Unique Contribution to Theory, Practice and Policy: Due to the complexities of the economic climate, it is recommended that banks should utilize a variety of lending approaches to analyze requests for loans. To help decrease and limit the risk of bankruptcy, different commercial banks ought to offer consulting assistance to lenders to verify that the loans are spent properly and for their stated reasons.

METHODOLOGY FOR MEASURING NON-PERFORMING CONSUMER LOANS

This technique assesses the risk of non-repayment of a consumer loan in a commercial bank. The bank must collect detailed information about the financial condition of a potential borrower based on the completed "application-questionnaire" on the CL and the list of documents provided by it. After receiving a loan application, the credit depart-ment of the bank should check the integrity of the submitted documents and their validity period, the accuracy of filling out certificates from the place of work (if any) - the validity of the employment contract, form, salary, etc. - by comparing the data specified in the loan application and received during the oral conversation. Further, the unit must determine their reliability, the validity of the monthly income indicated in the certificate from the main place of work, based on the specialty, field of activity by comparing with income paid (received) in similar fields of activity, assess the market position, stability, opportunities and development prospects an organization represented by the borrower, coborrower (or guarantor) and/or other family members. Based on the results of the verification of the above documents and the response to the request from the credit bureau, the bank's loan officer must substantiate and document his opinion on the approval / refusal of the bank's credit committee in issuing a loan in the form "Report on the results of underwriting". The credit committee of the bank must consider the opinion on underwriting of the loan and make a decision on granting or rejecting the CL to the borrower.

AUDIT INTERNAL, PENGENDALIAN INTERNAL, DAN GAYA KEPEMIMPINAN DALAM MENJAGA KETAHANAN GOOD CORPORATE GOVERNANCE (GCG)

This study was conducted by locating Village Credit Institutions (LPD) in Blahbatuh District, The respondents selected in this study were the Head of the Village Credit Institution (LPD), the Village Credit Institution Supervisory Agency (LPD), and the credit department staff, so that 102 respondents were obtained from 36 Village Credit Institutions (LPD) Blahbatuh District, Gianyar. The analytical are used in this study is using SPSS for multiple regression analysis. the following conclusions can be drawn. shows that all proposed hypotheses are obtained with positive values and there is a significant effect

Resolution of Non-performing Assets of Commercial Banks: The Evidence from Banker’s Perspective in Indian Banking Sector

The present article draws on the banker’s perspective and extracts some practical insights about the factors behind specific NPAs resolution strategies. Based on the thorough review of the perspective, conceptual and empirical literature, and using exploratory factor analysis (EFA), the study has identified 21 dimensions for ‘management of NPAs’. The empirical analysis of these dimensions has extracted 7 factors for management to be significant. A structured questionnaire has been developed and data has been collected from officers in different banks in India, especially working in the credit department. The questionnaire has been empirically tested for reliability and validity using confirmatory factor analysis (CFA) and also Z-test for checking the significance of the explored and confirmed factors. The present research work offers pragmatic suggestions for banking regulators, on improving the asset quality of banks in India and also throws new insights on effective credit management in banks. JEL Codes: G01, G21, G32, E44

Decision to Implementation of Credit Management System at Commercial Banks - Experimental Survey in Da Nang City, Vietnam

The purpose of this study is to evaluate the factors affecting the decision to deploy a credit management system at commercial banks in Da Nang city. The author used a combination of mixed research methods in this study. The qualitative research method aims to build a research model from the analysis of previous related studies. The author used a quantitative method to survey 336 subjects who are managers, direct employees of the credit department at banks. Research results show that there are four factors that greatly influence the decision to choose a bank. Deposit individual customer savings in order: usefulness, controllability, relevance, and implementation cost. Through this result, it will help commercial banks orient the development of LOS credit management system at commercial banks in the future.
 
 Received: 10 January 2022 / Accepted: 25 June 2022 / Published: 5 July 2022

SISTEM PENENTUAN KEPUTUSAN KELAYAKAN PENERIMA KREDIT MENGGUNAKAN METODE ROC - SAW

The Bali Mandiri Cooperative is a cooperative that operates in the savings and loan sector. Data processing of savings and loan activities submitted in credit applications is still done manually so that the credit department must make the right decisions, especially if there are doubts in determining decisions for prospective borrowers, where the doubts are because the criteria for prospective borrowers are almost the same, this is having an impact on the company if the wrong decision occurs in the event of bad credit. The decision support system using Rank Order Centroid (ROC) calculations and the Simple Additive Weighting (SAW) method compares manual and system calculations that show the same results. This system includes data management which provides for managing data criteria, attribute value data, and submitting data (credit applicant data, data selection period, data submission, and decision support system process). This data will produce a credit applicant report and a credit applicant selection report.

MANAJEMEN PENGELOLAAN PIUTANG PADA PT. FEDERAL INTERNASIONAL FINANCE (FIF) DI KABUPATEN BOALEMO

The purpose of this study was to describe the management of accounts receivable management at PT. Federal International Finance (FIF) in Boalemo Regency. The type of research used is phenomenological research with a qualitative approach. The data sources used are primary data sources and secondary data sources. The data analysis method used is the Miles and Huberman model data analysis technique with the stages of data reduction, data presentation and drawing conclusions or data verification. The results of this study indicate that the management of receivables at PT. Federal International Finance (FIF) of Boalemo Regency through the credit department or department must carry out a detailed examination either administratively or in accordance with the 5 C terms with the aim of knowing the customer's background. The return system must be adjusted to the policies of PT. Federal International Finance (FIF) in minimizing bad loans that will occur. So that the ability of consumers to repay receivables or credit can be according to the specified time and not past due

A Study on Ethical Challenges Faced by the Credit Officers in the Banking Industry of Bangladesh

This article covers the need for ethical norms and identifies ethical difficulties that arise in credit sections of the private banking industry in Bangladesh. A research sample of 25 commercial banks has been included, and 239 questionnaires were accepted as a sample for the purpose of estimation and hypothesis development. The variables included are qualitative in nature. Linear regression model was used for data analysis. The dependent variable is the challenge level in credit department, and the independent variables are sales target, higher authority pressure, central bank and government regulation, unethical financial incentive, and request from acquaintances. The findings show that there is a significant influence on the challenge level of credit department by sales target, higher authority pressure, central bank and government regulation, and unethical financial incentive. Therefore, it is recommended that banks increase their focus on upholding the code of conduct, thereby enhancing ethical standards for long-term profitability and improved customer satisfaction.