Credit scoring for individuals

Maria Dimitriu (), Elena Alexandra Avramescu and Razvan Constantin Caracota
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Maria Dimitriu: The Bucharest Academy of Economic Studies, Romania
Elena Alexandra Avramescu: The Bucharest Academy of Economic Studies, Romania
Razvan Constantin Caracota: The Bucharest Academy of Economic Studies, Romania

Economia. Seria Management, 2010, vol. 13, issue 2, 361-377

Abstract: Lending money to different borrowers is profitable, but risky. The profits come from the interest rate and the fees earned on the loans. Banks do not want to make loans to borrowers who cannot repay them. Even if the banks do not intend to make bad loans, over time, some of them can become bad. For instance, as a result of the recent financial crisis, the capability of many borrowers to repay their loans were affected, many of them being on default. That’s why is important for the bank to monitor the loans. The purpose of this paper is to focus on credit scoring main issues. As a consequence of this, we presented in this paper the scoring model of an important Romanian Bank. Based on this credit scoring model and taking into account the last lending requirements of the National Bank of Romania, we developed an assessment tool, in Excel, for retail loans which is presented in the case study.

Keywords: Credit scoring; credit risk; retail loans. (search for similar items in EconPapers)
JEL-codes: D81 E51 G31 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:rom:econmn:v:13:y:2010:i:2:p:361-377

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