An Empirical Research on Bank Client Credit Assessments

Quan Chen, Sang-Bing Tsai, Yuming Zhai, Chien-Chi Chu, Jie Zhou, Guodong Li, Yuxiang Zheng, Jiangtao Wang, Li-Chung Chang and Chao-Feng Hsu
Additional contact information
Quan Chen: Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China
Sang-Bing Tsai: Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China
Yuming Zhai: School of Economics and Management, Shanghai Institute of Technology, Shanghai 201418, China
Chien-Chi Chu: Department of Finance, Business School, Shantou University, Shantou 515063, China
Jie Zhou: College of Tourism and Service Management, Nankai University, Tianjin 300071, China
Guodong Li: Economics and Management College, Civil Aviation University of China, Tianjin 300300, China, gdli@cauc.edu.cn
Yuxiang Zheng: School of Economics & Management, Shanghai Maritime University, Shanghai 201306, China
Jiangtao Wang: Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China
Li-Chung Chang: Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China
Chao-Feng Hsu: Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China

Sustainability, 2018, vol. 10, issue 5, 1-17

Abstract: Individual microcredit loans involve large quantities and small amounts and necessitate rapid approval, therefore making simple and fast application approvals rather critical. Creditors must evaluate clients’ credit status and default risk within the shortest time when determining whether to approve or decline their applications, preventing overdue responses that negatively impact bank profits and management practices, and could trigger domestic financial crises. This study investigates client credit quality criteria, focusing on the expert opinions of bank managers. The decision-making trial and evaluation laboratory method is adopted to enable a comparison and analysis of the similarities and differences in how banks evaluate their clients’ character, ability, financial capability, and collateral. Based on causality and correlations among the criteria, we also identify the core problems and key improvement criteria in the evaluation system. Through survey results of professional managers from Taiwanese banks, this study uses the DEMATEL method to compare the differences in bank evaluation methods based on the four dimensions of clients’ character, ability, pockets, and collateral, as well as the corresponding 14 criteria. In order to improve the reliability and usefulness in bank client credit risk assessment, the assessment dimensions and indicators of bank client credit risk assessment are first discussed; second, the causal relationship and degree of mutual influence between different dimensions and criteria are researched and assessed; in the end, the paper discusses how to improve the function and the benefits of bank client credit risk assessment.

Keywords: credit assessment; decision making; bank client; finance; sustainability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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