The Adequacy of Information Systems for Supporting the Asset Quality Review Process in Banks. Evidence from an Italian Case Study

Elena Bruno (), Giuseppina Iacoviello () and Arianna Lazzini ()
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Elena Bruno: University of Pisa
Giuseppina Iacoviello: University of Pisa
Arianna Lazzini: University of Modena and Reggio Emilia

A chapter in Strengthening Information and Control Systems, 2016, pp 59-75 from Springer

Abstract: Abstract This chapter analyzes the role of the Information System (IS) in the Asset Quality Review process (AQR) for asset evaluation in a small Italian bank, whose main activity is credit intermediation (Mehta and Manhas in J Serv Res 5(2), 2006). ‘Information Technology (IT) is a critical component in creating value in the banking sector. It provides decision-makers with an efficient means of reporting information about risk, profitability and preceding conditions for a loan’ (Huaiq et al. in Monit Syst 16(2), 2011). IT is basic for supporting Risk Management (RM) in the decision-making process and aiding performance evaluation. Through a case study, we highlight the possibility of IS being able to support this new integrated process of credit monitoring, providing increasingly reliable real-time data, that are available on demand, and facilitating the development of global knowledge and new reporting tools, as well as the collaboration and integration between the areas of risk and business operating processes (Al-Laith in Int Manage Rev 8(1), 2012). The study focuses on the process of active monitoring of the entire credit portfolio, aimed at guiding the best migration between risk classes (Malinconico in Il credit risk management del portafoglio prestiti. FrancoAngeli, Milano, 2013) (Bouteille and Pushner in The handbook of credit risk management: originating, assessing, and managing credit exposures. Wiley Finance, New York, 2012). This is no longer understood as a sequence of stages, but as a set of integrated activities, in which the quality of information becomes a major determinant of the outcome (Bennardo et al. in J Internet Banking Commer 16(2), 2011). The study shows that the characteristics of the specific business make it necessary to take into account several aspects such as: variety of education and culture of the staff; functional relationships; and further appropriate technology resources. All these features affect the conception, development and deployment of IS solutions to be adopted in order to achieve the business objectives and in particular to improve asset quality, as mentioned above.

Keywords: Information system; Asset quality review; Credit monitoring process; Risk management (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/978-3-319-26488-2_5

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