The Optimal Credit Acceptance Policy

Carl C. Greer

Journal of Financial and Quantitative Analysis, 1967, vol. 2, issue 4, 399-415

Abstract: Most businesses sell on credit. To administer credit, such companies set credit granting, term, and collection policies. This article analyzes one aspect of credit granting policy: the determination of the optimal number of credit applicants that should be accepted by a creditor. The emphasis in the relevant literature traditionally has been on techniques for estimating a credit applicant's probability of default and, to a lesser degree, on the decision to accept an applicant given his estimated probability of default. Cumulatively, these two decisions are crucial to any business selling on credit.

Date: 1967
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jfinqa:v:2:y:1967:i:04:p:399-415_01

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