Risk and Efficiency in Credit Concession: A Case Study in Portugal

Carlos Arriaga and Luis Miranda
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Carlos Arriaga: School of Economics and Management, University of Minho, Portugal
Luis Miranda: School of Economics and Management, University of Minho, Portugal
Authors registered in the RePEc Author Service: Carlos Arriaga Costa

Managing Global Transitions, 2009, vol. 7, issue 3, 307-326

Abstract: The relationship between banks and customers has contributed to several theories in banking economics. The quality of the credit is crucial for banks. Banks classify the risk through quantitative and qualitative indicators. Quantitative indicators are much used by banks, but qualitative indicators are also considered in credit risk evaluation. Taken together, they contribute to increase efficiency and decrease doubtful credit. Several issues arise in order to understand if risk evaluation affects the efficiency of the banking sector or if it affects the bank customer relationship. We wish to analyse some quantitative and qualitative indicators used by the Portuguese banking system. Despite the reputation of a client being a very important qualitative indicator, it is not enough to determine a classification of low risk.

Keywords: credit; banks; bankruptcy; risk (search for similar items in EconPapers)
JEL-codes: E51 G21 G32 G33 (search for similar items in EconPapers)
Date: 2009
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