Credit Granting Research Articles

A Psychological Approach to Credit Risk Management: A Qualitative Dyadic Survey of Moroccan SMEs

The banking environment has become both unstable and vulnerable due to various fluctuations in the monetary sphere. Faced with these various disruptions, banks are increasingly threatened by risks affecting their activity and position on the financial market, notably credit risk. Risk management is the best defense shield for ensuring a healthy financial equilibrium in the long term. Nevertheless, it remains an advanced practice, which Moroccan banks are unable to support, due to the lack of human and financial resources. This article intends to highlight the importance of customer and banker behavior in the credit granting process. It analyses the customer's profile, which can have an impact on the credit granting decision, using differential psychology and in particular the theory of personality traits -BIG5-, and the banker's behavior, using the theory of judgement and decision-making - JDM-.

Analisis Prosedur Pemberian Kredit Dan Penagihan Piutang Pada Kantor Cabang PT. BPR Pijer Podi Kekelengen Simpang Selayang

This study aims to analyze the procedures for granting credit and collecting receivables in a company in order to identify the effectiveness and efficiency of the system used. Credit granting is an important aspect in financial management that can affect the company's liquidity and profitability. However, if not managed properly, this can increase the risk of bad debts and have a negative impact on the company's financial health. This study uses a qualitative descriptive method by collecting data through interviews, observations, and documentation. The results of the study indicate that the credit granting procedures in the company analyzed have followed applicable standards, but there are still some weaknesses in the credit assessment process that can lead to the risk of bad debts. On the other hand, receivables collection in the company still faces challenges in terms of timeliness and effectiveness of communication with customers. Thus, it is expected that the company can increase liquidity and reduce the risk of bad debts, which ultimately contributes to the company's financial stability.

Does Soft Information Mitigate Gender Bias in Corporate Lending?

AbstractGender bias in leadership and decision-making is a well-documented and pervasive topic that continues to garner significant attention in academic research and business literature. In this paper, by exploiting a unique proprietary dataset of 550 mid-corporate loan applications managed by a major European bank, we explore how the use of soft information influences lending decisions of female loan officers as compared to their male counterparts. We find that use of soft information reduces information asymmetry which helps female officers in making diligent lending decisions resulting in increased granted credit with a lower default probability. We also investigate gender affinity within the banking organisation and find that female loan approvers are more likely to be supportive of their subordinate female loan officers by approving more credit to the loan applications handled by female loan officers. Finally, we examine the possible mechanisms that can explain these results, and find that female loan officers are able to better collect and use soft information as they cultivate and maintain deeper firm-bank relationships with their clients due to higher threat of losing or being penalized in their jobs for any possible errors. We also rule out any other possible explanations such as differences in workload, work experience, loan officers’ optimism, managerial ability, and screening capabilities between female and male loan officers. Our findings carry important policy implications, reflected in the optimal allocation of capital in the economy and the reduction of gender-related exclusion, which is vital in creating an equitable society and fostering a more ethical and inclusive workplace.

Violation of the Prudential Principle in Cooperative Credit Granting

This research examines the violation of the prudential principle in credit granting by cooperatives from a normative legal perspective. The research aims to analyze the legal framework governing the prudential principle in cooperative credit granting, identify common forms of violations, and formulate legal implications and recommendations to strengthen the application of this principle. The research method used is normative juridical with statutory and conceptual approaches. The results show that although regulations governing the prudential principle in cooperative credit granting exist, their implementation still faces significant challenges. Common forms of violations include negligence in credit analysis, weak monitoring systems, and conflicts of interest in decision-making. The legal implications of these violations range from administrative sanctions to criminal charges for involved cooperative officials. This research recommends strengthening the regulatory framework, enhancing supervisory capacity, and reforming cooperative governance to prevent future violations of the prudential principle. In conclusion, enforcing the prudential principle in cooperative credit granting requires a comprehensive approach involving regulatory reform, institutional strengthening, and increasing legal awareness among cooperative actors.

Analisis Prosedur Pemberian Kredit pada KSP Kopdit Pintu Air Cabang Koting

This research aimed to define the process of credit approval at KSP Kopdit Pintu Air of Koting Branch. The research method used was descriptive qualitative, with primary data as the main source. Analysis of the credit approval process was conducted through observations and interviews. The result of results indicated that the credit granting process at KSP Kopdit Pintu Air of Koting Branch consisted of several stages such as credit application, credit analysis, credit disbursement, and credit assistance. Although the credit granting process at KSP Kopdit Pintu Air of Koting Branch had been generally effective, principle of granting credit based on 5C had been well implemented at KSP Kopdit Pintu Air of Koting Branch was not applied to small loans.

Analisis Kredit Bermasalah pada Mandala Multifinance Tbk Karawang

Mandala Multifinance Tbk Karawang is a leasing company that helps customers in obtaining financing for capital needs. Therefore, any distribution of credit should be well monitored by the management of the company so that the credit is not abused. The study aims to analyze problematic credit and find out the application of the 5C principle in the granting of credit that affects the level of NPL (Non Performing Loan) on the Mandala Multifinance Tbk Karawang. The method applied uses qualitative data with a triangulation approach, which includes the collection of primary data through observations, interviews, and documentation. The Non-Performing Loan (NPL) financial ratio is used as a tool for analyzing data. The results of the research show that the application of the 5C principle in the distribution of credit in Mandala Multifinance Tbk Karawang is still ineffective because there are shortcomings in the analysis process carried out. The conclusion of this study is that the highest NPL ratio in 2021 is 4.35, while the lowest in 2020 is 3.32. The average NPL for the three years 2020-2022 was 3.74, marking a healthy category.

ANALISIS PENGAWASAN PEMBERIAN KREDIT UNTUK MEMINIMALISIR KREDIT BERMASALAH PADA PT. BPR NUSANTARA BONA PASOGIT 14 BOGOR

This research was conducted with the aim of understanding and analyzing the credit monitoring process to minimize non-performing loans at PT BPR Bona Pasogit 14 Bogor, located at Jalan Raya Puncak Cibogo II KM.74 No.74 No.16 RT 03 RW 05, Cipayung Village, Megamendung District, Bogor Regency, West Java. The study uses a descriptive qualitative approach with triangulation methods, including interviews and field observations. The results of the study indicate that there were errors in the processes and procedures during the granting of credit to debtors, as the staff did not apply the 5C principles. There was a lack of credit monitoring both during the credit granting process and after the credit was given, leading to improper use of the credit by customers. Additionally, certain conditions, such as the COVID-19 pandemic, caused business declines, resulting in debtors being unable to make payments or defaulting, thus leading to non-performing loans.

Factors Affecting the Financial Performance of MSMES: Financial Literacy, Financial Inclusion, Financial Self-Efficacy, Financial Technology, Credit Granting, and Intellectual Capital

MSMEs are one of the economic icons that have the biggest impact on Indonesia's economic growth, especially when a crisis occurs. MSMEs are able to get through monetary crises such as in 1998 and during the Covid-19 pandemic. MSMEs are independent and have great potential to improve community welfare. This research aims to examine the influence of the variable’s financial literacy, financial inclusion, financial self-efficacy, financial technology, credit granting, and intellectual capital on the financial performance of MSMEs in the Bangka Belitung Islands Province. This research is quantitative research with an associative method using a quantitative approach from primary data through distributing questionnaires. The sampling method was nonprobability sampling with a purposive sampling technique so that 102 MSME actors were obtained. The data analysis technique uses SPSS version 26 software. The research results prove that partial financial inclusion (X2), financial technology (X4), credit granting (X5), and intellectual capital (X6) have a positive and significant effect on the financial performance of MSMEs, while financial literacy (X1) and financial self-efficacy (X3) do not have a positive and significant effect on the financial performance of MSMEs. Simultaneously, the variables financial literacy, financial inclusion, financial self-efficacy, financial technology, credit granting, and intellectual capital have a positive and significant effect on the financial performance of MSMEs in the Bangka Belitung Islands. The R Square value in this research is 0.885, so it is concluded that 88.5% of the variation in the dependent variable can be explained by the independent variable and the remaining 11.5% is influenced by other variables not examined in this research. It is hoped that the research results can become reference material and motivation for MSMEs in improving the financial performance of their businesses.

Advancing credit risk modelling with Machine Learning: A comprehensive review of the state-of-the-art

Ensuring financial stability necessitates responsible credit granting, so lending institutions maintain sufficient regulatory capital to withstand losses from defaults. Classification methods like Logistic Regression (LR) have long been the standard for estimating default likelihood, but they struggle with increasing operational demands and regulatory standards. Advances in Machine Learning (ML) now allow models to handle larger datasets with greater predictive power. Algorithms such as Decision Trees (DT), Support Vector Machines (SVM), and Neural Networks (NN), though not readily transferable to practical applications, have the potential to enhance the credit risk modelling process. While much of the literature on ML in credit risk focuses on sophisticated, experimental algorithms not yet ready for commercial use, few address the steps and nuances of model development. Our article fills this gap by systematically reviewing the literature on ML in consumer credit risk modelling, highlighting the current state of scientific knowledge. We analyze the frequent steps involved and demonstrate how ML's strengths can be leveraged throughout them. From pre-processing steps like data cleaning, transformation, and reduction, to variable selection and parameter optimization, our findings indicate that ML is becoming increasingly important in financial risk management. However, standardized modelling procedures are needed before complex ML classifiers can be commercially deployed. Meanwhile, although relatively interpretable ML models built around DTs and Random Forests (RF) do showcase increased performance in popular credit risk datasets, it is clear that the potential to benefit from ML spans further, with complex models enabling increased performance by aiding simpler, explainable classification algorithms.

Corruption’s impact on non-performing loans of banks in emerging markets: Empirical insights

PurposeThis study investigates the impact of control of corruption (COC) on nonperforming loans (NPLs) in South Asian countries. MethodologyThe present study selected three South Asian countries (Pakistan, India, and Bangladesh) from 2000 to 2019. Further, the current research employed the fixed effect model (FEM) analysis on a sample of 81 conventional banks based in South Asian countries. FindingsThe result reveals that control of corruption has a significant and negative association with NPLs, indicating that weak control of corruption would lead to an increase in NPLs in the sample countries. ImplicationsThe findings provide insights to the policymakers in making strategic decisions about NPLs regarding control of corruption impact. OriginalityThe significant increase in NPLs is worrying as it may undermine banks’ ability to grant credit and support a country’s economic recovery. The increasing trend of NPL rates and limited studies in related literature assessing NPLs in the South Asian region has motivated this study, which examines the external and internal factors that may influence NPLs.

Improving and Maximizing the Financial Performance of MSMEs: A Case Study on MSMEs in the Bangka Belitung Islands Province

Even in times of financial crisis, MSMEs remain an important economic tool that influence Indonesia's economic growth. MSMEs have the power to raise people's standard of living, particularly in terms of money. The purpose of this study is to investigate how the financial performance of MSMEs in the Bangka Belitung Islands Province is impacted by credit giving, financial inclusion, fintech, and intellectual capital characteristics. This study uses an associative methodology and is quantitative in nature. Purposive sampling procedures were used to obtain 102 MSME actors for the sample. SPSS software version 26 is used to assist with the data analysis technique. The study's findings demonstrate that financial inclusion (X2), fintech (X5), intellectual capital (X6), and partial credit giving (X1) all significantly and favorably impact MSMEs' financial performance. The Bangka Belitung Islands' MSMEs' financial performance is positively and significantly impacted by the concurrent factors of credit granting, financial inclusion, fintech, and intellectual capital. The independent variable accounts for 88.5% of the variation in the dependent variable, with the remaining 11.5% being impacted by factors not examined in this study, according to the R Square value of 0.885 in this investigation.

Activity for CUREs to increase student understanding and application of responsible authorship and publication practices.

Professional development of scientists is enhanced by training students in responsible conduct of research earlier in their careers. One aspect of responsible conduct of research is authorship ethics, which concerns granting of credit to those who make intellectual contributions to the research. The activity discussed in this article emphasizes how authorship ethics can be integrated with Course-based Undergraduate Research Experience (CURE) and includes an adaption that could also be used for independent research students. The activity allows students to reflect upon inequalities and problems seen in scientific authorship, including gender bias, failure to credit effort (ghostwriters), and inclusion of authors that did not meaningfully contribute to the work (honorary/gift authorship). Themes seen in student reflections on how they could demonstrate ethics in authorship included: determining authorship by contribution, appropriate attributions on curriculum vitas (CV) and posters, different credit levels, understanding authorship criteria, and tracking contributions. Themes seen in student reflections on the importance of authorship were proper authorship credit distribution, authorship impacting career opportunities, and accountability in research. In the activity, students also created attributions for a poster to be presented from their research. We found that most students were able to create attributions that were correctly formatted, included the same authors, and positioned authors in the same order as other group members, matching what was presented on the finalized poster. We found that students' reflection on authorship and this professionalization of their activities in their CURE led to modest increases in their view of themselves as scientists.

Keputusan Pemberian Kredit Kepada UMKM Dalam Peer-To-Peer Lending: Faktor-Faktor Apa Saja Yang Dipertimbangkan Investor?

This study aims to examine and demonstrate six factors influencing the decision to grant credit loans to MSMEs on the conventional Peer-to-peer (P2P) lending platforms Investree and Koinworks. These six factors are loan amount, loan term, credit rating, loan purpose, business duration, and financial statement information. A quantitative approach and secondary data from the publications of the Investree and Koinworks applications or websites were utilized in this research. A sample of 225 MSMEs was selected from a population of 267 using purposive sampling. Logistic regression analysis revealed that loan amount, credit rating, and loan purpose affect MSMEs on the Investree and Koinworks P2P lending platforms, while loan term, business duration, and financial statement information do not. These findings suggest that both P2P lending platforms consider various factors when evaluating MSME borrowers. The differences between Investree and Koinworks indicate distinct characteristics and appeals to MSMEs on each platform, which are also discussed in this study. The results of this research can assist MSMEs in preparing loan proposals to enhance credibility with lenders, provide better insights to lenders in decision-making, and serve as a reference for other P2P lending platforms in evaluating factors necessary for credit loan decision-making processes.

Investigating tax risk’s influence on tax avoidance and debt costs: evidence from France

Purpose This paper aims to examine the impact of tax avoidance on the cost of debt. It also investigates the effect of tax risk on the relationship between tax avoidance and the cost of debt. Design/methodology/approach Two hypotheses are tested on a sample of nonfinancial French firms listed in the société des Bources Françaises 120 index from 2010 to 2022 using the feasible generalized least squares. To ensure the robustness of the findings, the authors changed the measures of tax avoidance and tax risk and used instrumental variable regression to effectively address concerns related to endogeneity. Additional analysis is conducted to examine if the relationship between tax avoidance and the cost of debt varies based on the magnitude of tax risk. Findings The authors found that tax avoidance negatively affects the cost of debt. However, when tax avoidance is associated with a high risk, it impacts positively the cost of debt. Practical implications This study’s findings are relevant to firms, creditors and French lawmakers. Creditors must make their decision to grant credit based simultaneously on proxies of tax avoidance and tax risk. Managers must effectively manage tax risks to protect their financial decisions, urging French policymakers to implement new regulations on corporate tax risk management. Originality/value To the best of the authors’ knowledge, this study is the first to have investigated the joint impact of tax avoidance and tax risk on the cost of debt in the French context.

Personal bankruptcy prediction using machine learning techniques

It has become crucial to have an early prediction model that provides accurate assurance for users about the financial situation of consumers. Recent studies focused on predicting corporate bankruptcies and credit defaults, not personal bankruptcies. Due to that, this study fills the literature gap by comparing different machine learning algorithms to predict personal bankruptcy. The main objective of the study is to examine the usefulness of machine learning models such as random forest, XGBoost, LightGBM, AdaBoost, CatBoost, and support vector machines in forecasting personal bankruptcy. The research relies on two samples of households (learning and testing) from the Survey of Consumer Finances, which was conducted in the United States. Among the estimated models, CatBoost and XGBoost showed the highest effectiveness. Among the most important variables used in the models are income, refusal to grant credit, delays in the repayment of liabilities, the revolving debt ratio, and the housing debt ratio.

Navigating the Financing Constraints: The Role of Social Capital in Developing Countries

This article uses data from 111 developing countries to document the effect of social capital on financing constraints faced by private firms. The results show that firms headquartered in countries with high social capital face lower financing constraints than firms headquartered in countries with low social capital. These findings are robust to a comprehensive inclusion of country-level and firm-level controls. We argue that social capital is instrumental in creating an environment in which managers are less likely to act opportunistically, thereby increasing the trust of capital providers in firms. Consequently, capital providers are more likely to grant credit to firms, thereby reducing the financing constraints. The findings also show that the relationship between social capital and financing constraints is moderated by firm-specific and country-specific characteristics. Firms with weaker fundamentals and firms headquartered in countries with weaker institutions are more likely to benefit from improvement in social capital. JEL Codes: A13, G3

Consumer participation in the credit market during the COVID-19 pandemic and beyond

Abstract This article analyses the consumer’s decision to apply for credit and the probability of the credit being accepted in the euro area during a period characterized by the unprecedented concomitance of events and changing borrowing conditions linked to the global coronavirus disease 2019 (COVID-19) pandemic and the Russian invasion of Ukraine. We use data between 2020Q1 and 2023Q2 from the ECB’s Consumer Expectations Survey. We find that credit demand is the highest when the first lockdown ends and it drops when supportive monetary compensation schemes are implemented. There is evidence that constrained households are significantly less likely to apply for credit. Credit is more likely to be accepted under favourable borrowing conditions and after the approval of national recovery plans. We also find that demographic, economic factors, perceptions, and expectations are associated with the demand for credit and the credit grant.

Analysis Of The Implementation Of Internal Control System On Non Performing Loan (A Case Study On Bank BJB KCP Cicurug)

This research aims to determine the implementation of internal control systems on credit delinquency in Bank BJB KCP Cicurug. The variable used in this research is the internal control system. This research is a qualitative study using a qualitative descriptive method, where data is collected from the research object and the internal control system in Bank BJB KCP Cicurug is analyzed. The data collection methods used in this research are interviews, observations, and literature review. The results of the research show that Bank BJB KCP Cicurug has implemented a comprehensive internal control system in managing credit risks. The credit granting process is conducted through strict evaluation stages, including credit feasibility analysis and financial assessment. Credit monitoring and supervision are carried out continuously to identify potential credit delinquencies and take appropriate actions. Bank BJB KCP Cicurug also has accurate and transparent accounts receivable recording procedures and a professional debt collection team. Additionally, the bank has a careful bad debt provisioning policy to manage problematic debts. Although the internal control system implemented by Bank BJB KCP Cicurug has significantly contributed to managing credit risks, the research also identified several challenges that need to be addressed.

Sistem Akuntansi Pemberian Kredit Agunan Rumah Dalam Mendukung Pengendalian Internal Pemberian Kredit

This research aims to explain and analyze how the Accounting System for Providing Home Collateral Credit at PT. Bank Tabungan Negara, Tbk Gorontalo Branch Office. The method used in the research is a qualitative descriptive review. PT. Bank Tabungan Negara, Tbk Gorontalo Branch Office has implemented an accounting system for granting home mortgage credit well and meets the internal control elements and is in accordance with established standards, and is supported by an E-Loan system which can provide convenience in the credit granting process and more effective and efficient credit decision making from the credit granting system.

Implementasi Sistem Informasi Akuntansi Kredit Gadai Emas Di PT Pegadaian

This research was prepared to determine the procedures for granting, repaying, and auctioning gold pawn loans at PT Pegadaian (Persero) Tajur Branch Service Unit as one of the Fast and Secure Credit products offered by the company to the public to be able to obtain loans with collateral in the form of gold. The purpose of this writing is to find out about the Gold Pawn Credit Accounting Information System at PT Pegadaian and how the effectiveness of Internal Control on the Gold Pawn Information System at PT Pegadaian. The procedure for granting a gold pawn starts from a credit application, valuation of collateral, disbursement of credit loan funds, to storage of collateral, followed by settlement of the loan money within a maximum of four months by redemption, installments, or renewal. If the customer is unable to repay later, the collateral will be auctioned with the customer's consent based on the terms and conditions at the beginning of the credit loan process. Based on the results of the review, all of the above procedures have been carried out by the principles of good internal control, including standard procedures that are outlined in the form of flowcharts, there is a separation of duties made in the organizational structure and job descriptions, there are appraisers to overcome the risk of the insufficient value of collateral, there are adequate authorization procedures when granting credit and the auction process, there is verification of credit granting requirements, security of pawn deposits is very adequate, supported by a pawn application system and supporting documents to ensure the achievement of the objectives of granting credit with gold pawning. Keywords: Gold Pawn Credit Procedure, Internal Control, Accounting Information System