The most important issue is the credit risk management for loans granted to commercial banks and the adjustment of credit policy to the quality of the loan portfolio, the clients' economic and credit standing, borrowers, business climate, customer incomes and changing systemic risk, investment in the business sector and the changing average creditworthiness of borrowers and potential customers. I described these issues in my publications.
In view of the above, I am asking you the following question: What are the most important determinants of the commercial banks' lending policy in your country?
Please, answer, comments. I invite you to the discussion.
In Malawi, the following factors play significant role in credit decisions:-
1. Multinational companies (even though few in numbers) are favourably sought after. Often access facilities below the published rates.
2. Predominantly cash based businesses which deposit large cash on daily bases even if liquidity ratios and gearing are far below recommended indices.
3. Related parties of major conglomerates even if their financial conditions are not impressive.
4. Cash-covered (cash-collateralized) credit applications receive favourable reviews even if viability of the intended projects appear to be blurr.
Developing countries like India, the situation is different.
1. Because of heavy import of oil affect the currency value, which pushes the Inflation. which automatically affect the business environment. (eats the profit)
2. Most of the banking businesses are dominated by Public sector Banks in India. The Public Sector Banks are suffered due to Bad Loans ( Non-Performing Assets).
3. The bad loans are due to poor lending policy of banks
4. Here the demographic environment is favorable and here in India new innovative finances like venture capital (private equity) plays a vital role in financing the MSMEs.
5. Retail loans are growing due to favorable demographic environment (Housing Finance, Auto Finance and Personal loans etc.,)
Hi Dariusz,
If you are interested in a developed country perspective, then for New Zealand you can get further information at: http://www.bizfinance.co.nz/business-finance-faq/.
There are two key bodies that affect the commercial lending market and banking generally in NZ. The first is the Reserve Bank of New Zealand (RBNZ) through the Reserve Bank of New Zealand Act 1989 (RBNZ Act). This sets out the powers RBNZ as New Zealand's prudential regulator. The second is the Financial Markets Authority (FMCA) under the Financial Markets Conduct Act 2013 which contains the rules for financial conduct and disclosures.
Regards
Adrian
It goes unsaid in Australia as many vested interests publish varying perspectives. On the one hand the Reserve Bank of Australia has interest rates on hold and at rates around those of 70 years ago.
However the commercial banks are crying that their cost of funds is rising. They are increasing interest rates to borrowers while record low interest rates are advertised. Borrowers are confused.
I suspect a key influence is offshore borrowing to lend into Australia and the impact of exchange rates is the overarching factor - but that does not seem to be mentioned.
First is to provide adequate credit to the Industry & Services Sector. Agriculture is another are where Credit Flow is mandated. Also other identified sectors including small enterprises. There are overall sectoral caps to mitigate risk.
In addition to the borrowers' economic and credit standing, business climate, customer incomes and changing systemic risk, and the changing average creditworthiness of borrowers and their potential customers to their line of business, I am quite convinced that the type of leadership in the governance of the country and its economy is a major determinant plus the legal proceedings in recovering debt.
Credit score, credit checking, Legal status checking/search and to furnish banks with some docs such as audited financial statement for the past 3 years, cash flow projection among others
Dear Friends and Colleagues of RG Have you studied the correlation between the change in the rate of economic growth of the country, economic and financial condition of business entities, income of citizens, corporate investment, investment risk, liquidity risk, debt, creditworthiness, creditworthiness of enterprises, etc. and the changing lending policy of banks commercial enterprises that provide business loans and consumer loans to citizens? Do you think this correlation is correct? Is the scope of this correlation correct as compared to other determinants of the changing lending policy? What significance is assigned to this correlation in the context of the processes of improving bank credit risk management in commercial banks?
Best wishes
Dear Friends and Colleagues of RG
The most important issue is the credit risk management for loans granted to commercial banks and the adjustment of credit policy to the quality of the loan portfolio, the clients' economic and credit standing, borrowers, business climate, customer incomes and changing systemic risk, investment in the business sector and the changing average creditworthiness of borrowers and potential customers. I described these issues in my publications.
Do you agree with me on the above matter?
Please reply
I invite you to the discussion
Best wishes
In view of the above, it is also important to include in the above discussion also the following issue:
How would you rate the activation of commercial banking loans through low central bank interest rates?
How would you rate the activation of commercial banking loans, i.e. an attempt to stimulate economic activity and economic growth of the country through the policy of low central bank interest rates?
Under what economic conditions such a monetary policy may be conducted so as not to over-invest economic processes, i.e. not to overly high the level of investment processes and acceptance, most business entities have too high levels of investment risk and too high levels of credit risk by banks commercial?
How should the process of managing systemic risk in the central bank be improved and how should the process of credit risk management be improved in commercial banks so that no further financial crisis is generated?
I have answered these questions in my scientific publications whose links I have posted below.
In view of the above, inviting you to discuss the above issues, I am asking you the following question:
How would you rate the activation of commercial banking loans through low central bank interest rates?
Please reply
I invite you to discussion and scientific cooperation
Dear Friends and Colleagues of RG
The issues of risk management in the context of determinants of the global financial crisis, globalization processes, technological progress and other factors I described in the publications:
Article Anti-crisis state intervention and created in media images o...
Article Soft monetary central banking policy and Plan for Responsibl...
Article APPLICATION OF DATA BASE SYSTEMS BIG DATA AND BUSINESS INTEL...
Article GLOBALIZATIONAL AND NORMATIVE DETERMINANTS OF THE IMPROVEMEN...
Article Determinants of credit risk management in the context of the...
Article Importance and implementation of improvement process of prud...
Article The role and application of Keynesian macroeconomic anti-cri...
Article THE SHADOW BANKING AS AN EXAMPLE OF INEFFICIENCIES IN THE FU...
Article ACTIVATING INTERVENTIONIST MONETARY POLICY OF THE EUROPEAN C...
Article A safe monetary central banking policy as a significant inst...
I invite you to discussion and cooperation.
Best wishes
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